AUD/USD clings to 0.6700 ahead of Aussie trade balance
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AUD/USD clings to 0.6700 ahead of Aussie trade balance

  • AUD/USD remains modestly changed despite the latest bounce off multi-year low.
  • EU-US trade tension, fears of the US recession weigh on market sentiment.
  • Second-tier activity numbers, Trade Balance to decorate Australia’s economic calendar.

The AUD/USD pair refrain from extending the previous day’s pullback while taking rounds to 0.6700 during early Asian morning on Thursday.

The Aussie pair took a U-turn from a decade low on Wednesday after downbeat prints of the US ADP Employment Change and trade war announcements with the EU weighed on the US Dollar (USD).

However, the pair’s gains were limited as overall market sentiment also had to bear the burden of the US recession fears with Wall Street portraying the sea of red and the US Treasury yields also testing one month low.

It should also be noted that the absence of the Chinese players for a week added weakness into the market’s latest momentum while a thin economic calendar contributed in its own way.

Moving on, investors will keep an eye over the second-tier purchasing managers’ index (PMI) numbers from Australia as first hand clues before August month trade balance data gains attention. Further, trade/political headlines and additional clues of the US economic strength will also be in the spotlight.

While market consensus favors a 6,000M figure for the Aussie trade balance, TD Securities seem too optimistic while saying, “Iron ore exports to China were very healthy in August despite a flare up in trade tensions, while a drop in oil prices should help reduce Australia’s import bill. We pencil in a A$7500m surplus for the August Trade Balance.”

Technical Analysis

Late-September lows surrounding 0.6740 act as an immediate resistance ahead of 21-day simple moving average (SMA) level of 0.6800 and early-August highs nearing 0.6820. On the downside, 0.6685 and 0.6670 hold the keys to the pair’s fresh south-run targeting 0.6600 round-figure.

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