- AUD/USD begins the week with a drop to 0.7150.
- US dollar gains dimmed Wall Street’s shine, Treasury yields dropped.
- COVID-19 cases rise in Europe, slow down in Victoria and the US.
- Economic data were mixed at home, upbeat in America, nothing major to watch in Asia.
AUD/USD extends the previous losses while declining from 0.7168 to 0.7150, currently around 0.7160, as Aussie traders kick-start the week’s trading. The pair snapped eight-week-old winning streak while closing around 0.7155 during the last one. Although the coronavirus (COVID-19) cases have slowed down from Victoria and the US, coupled with the equity run-up that generally helps the pair, the US currency’s pullback from multi-month lows gained major attention.
Return of the bears?
The pair’s first weekly loss in many troubles the bulls at a time when the pandemic’s second wave is likely to push RBA policymakers towards the bearish stand. Though, the US dollar’s recovery moves are doubtful even if data from the world’s largest economy have started coming in positive.
On Friday, the US PMIs and Existing Home Sales managed to keep the greenback traders happy with upbeat figures. On the contrary, Australia’s upbeat Retail Sales couldn’t supersede the weaker preliminary estimates of August Commonwealth Bank PMIs.
Elsewhere, the pandemic numbers from the US have stabilized off-late while those from Victoria rose Friday’s five-week lows of 179 to 182, as per The Guardian. Vaccine hopes are gaining momentum with US President Donald Trump earlier said that lead candidates are in final trials.
Talking about the Sino-US saga, US President Trump recently raised the possibility of decoupling the US economy from China, a major purchaser of US goods, as per Fox Business News.
It should also be noted that the American Congress hasn’t yet started talking about the much-awaited stimulus as opposition Democratic Party keeps restricting the talks. House Speaker Nancy Pelosi earlier showed readiness to cut demands in half before stepping back on Friday.
Amid all these catalysts, Wall Street managed to post another good week with the S&P 500 marking its best run in the year while rising for the fourth week in a row. Further, US 10-year Treasury yields remained on the back foot to 0.636%.
Moving on, traders will keep eyes on the risk catalysts amid a light calendar. In doing so, trade war, COVID-19 and US stimulus will be the key to watch.
Technical analysis
Despite easing from the yearly top, AUD/USD prices remain beyond 21-day EMA and the monthly support line, respectively around 0.7150 and 0.7140, on a daily closing basis. As a result, the bulls have hopes if the quote manages to cross 0.7250. However, a downside break of 0.7140 might not hesitate to recall 0.7065/60 support area comprising June month’s high and July 24 low.
Share
