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  • AUD/USD awaits fresh clue to extend the heaviest losses in three weeks.
  • Coronavirus weighs on the market’s risk tone, tension from the Middle East and the US data also play their roles.
  • Aussie NAB Business Confidence in immediate focus, US data will be watched later but news will keep the driver’s seat.

AUD/USD remains in the 11-pip range between 0.6763 and 0.6752, currently declining to 0.6760, by the press time of early Asian session on Tuesday. The quote earlier slipped to the early-October lows as the market’s fear of coronavirus contagion had a dual negative impact on the Aussie due to its close ties with China and also because of its risk-barometer image.

The Aussie bears cheer the largest customer’s worries…

An otherwise good Lunar New Year celebration time for China has turned into a nightmare for the dragon nation due to the outbreak of coronavirus. The lethal disease caused travel ban advises from the US and Canada while also pushing the policymakers to avoid any celebration, despite extending the New Year holidays, while concentrating on the solution. The widespread fears got a boost after the Hill quoted Chinese health officials that suggest an increased risk of a faster-growing epidemic.

Other than the risks from China, renewed tension between the US and Iran have also gained global attention. The US Defence Secretary Mark Esper conveyed the Trump administration’s ability, together with France, to make Iran behave like a normal country.

Also weighing on the pair could be the better than expected -3.1 to -0.2 figure of the US Dallas Fed Manufacturing Index. As for this, analysts at the Australia and New Zealand Banking Group said, “the January Dallas Fed index continued the improvement in regional manufacturing data. New orders, production and capacity utilization all rose, though employment eased. The regional data are all pointing to a basing in output as 2020 gets underway.”

To better portray the market mood, the US 10-year treasury yields drop to the 15-week low to sub-1.6% whereas Wall Street also marked losses that are in excel of 1.0%.

Looking forward, the National Australia Bank’s (NAB) Business Confidence and Business Conditions for December, expected 1 and 3 versus 0 and 4 respectively, could offer the immediate impulse for traders. Following that, the US Durable Goods Orders, the Richmond Fed Manufacturing Index and Consumer Confidence could grab the spotlight. It should, however, be noted that the news headlines from China and the Middle East will remain as the key market driver all the time.

Technical Analysis

Sellers await the quote’s declines below 0.6750 to question October 2019 low near 0.6670 while a pullback beyond 0.6800 can help recall 0.6850/55 back to the chart.