- AUD/USD has been in the choppy range following its drop to a multi-year low.
- Coronavirus fears, downbeat Australian unemployment and PBOC’s rate cut all dragged the Australian dollar down.
- The US fundamentals continue to shine the crown of King Dollar.
- PMIs from Australia/US, Chinese headlines will be in focus.
AUD/USD has been in a 10-pip range between 0.6610-20 for the last five hours following its show of the bears’ rule during Thursday’s Asian session. The Aussie pair currently seesaws near 0.6615 as the Asian traders step forward for Friday’s trading session.
While fears of coronavirus outbreak, downbeat Australian jobs report and PBOC’s rate cut kept the quote under pressure, the broad US dollar strength played its role to please the sellers.
Aussie fundamentals increase the odds of RBA’s rate cut…
While the RBA continues to run the show of cautious optimism, the latest employment data from Australia flashed warning signs. With the headlines Unemployment Rate snapping two-month winning streak by rising to 5.3%, the RBA is expected to announce a rate cut earlier than previously anticipated mid-2020. As per the Commonwealth Bank of Australia, “Reserve Bank of Australia will cut rates from 0.75% to 0.50% in April has been reinforced by the Aussie January labor market data.”
Coronavirus fears lay a little heed to the change at home…
Diplomats in Beijing continue to trying to placate traders that the situation is improving. However, the second change in the methodology to count cases and spreading infections/deaths outside China kept the optimists away. It should also be noted that People’s Daily recently came out with expert comments on coronavirus that highlight fears of it being turned into the chronic disease.
“Total cases outside of China are unfortunately yet to budge off an exponential trend, though the Diamond Princess incubator has a lot to do with that. In many countries with a limited number of known cases there has been little to no evidence of on-the-ground transmission. Further lifts in total global cases and deaths are inevitable in the near-term, however, and will continue to test markets’ resilience,” said the Australia and New Zealand Banking Group (ANZ).
Long live the King Dollar…
With the Philadelphia Fed Manufacturing Survey offering a positive surprise by rising to the highest since February 2017 to 36.7, fears that coronavirus is having any impact on the US economy are widely ruled out for now. That said, expectations that China will follow the phase-one deal commitments despite coronavirus and the US trade deals with Canada and Mexico also play positive for the greenback.
Looking forward, the Commonwealth Bank of Australia’s PMI data for February can be considered as an immediate catalyst while activity numbers from the US and Coronavirus headlines likely to remain in the spotlight.
Technical analysis
In addition to 0.6600 round-figure, late-February 2009 tops near 0.6545 are likely on the sellers’ radars during the further declines whereas February 10 low near 0.6710 acts as the immediate resistance.
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