- Fears of no trade deal between the US and China leading the global economy towards another bitter recession weigh on the Aussie.
- Recent dovish comments from the RBA add downside pressure to the quote.
- The lack of major data/events keeps trade headlines on markets’ radar.
With the US and China keep being at loggerheads, AUD/USD fails to recover the latest losses while making the rounds to 0.6780 during initial Monday morning in Asia.
The Aussie pair slipped beneath January low after the Reserve Bank of New Zealand’s (RBNZ) surprisingly higher than an expected rate cut of 0.25%. Dovish comments by the Reserve Bank of Australia (RBA), in its quarterly monetary policy statement, could also be considered adding weakness to the pair.
On the trade front, the US continues to exert pressure on China, this time by gradually damaging Huawei, which the dragon nation doesn’t want to surrender and silently retaliates through stepping back from previous promises on agricultural imports. All this has again raised a big question on whether the world’s two biggest economies will ever stop this trade-war? If not, is it likely that another global recession is waiting underneath the carpet?
Market sentiment was also negatively affected by the geopolitical tension emanating from the US, the EU, the UK and the Middle East.
With this, global equities and bond yields have been on a south-run with the US 10-year and 3-month yields nearing a recession signal.
The economic calendar remains silent for the day and hence increasing the importance of trade-related news in directing near-term Aussie moves.
Technical Analysis
Not only June 18 bottom surrounding 0.6831 but 21-day exponential moving average (EMA) level of 0.6856 and May month low close to 0.6865 also acts as nearby important resistances to watch. Alternatively, a downside break of Thursday’s low around 0.6745 can trigger fresh declines to January month trough around 0.6684 and then to recent low close to 0.6677.
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