- AUD/USD remains on track to finish week little changed.
- US Dollar Index is posting modest daily losses on Friday.
- Eyes on Wall Street and US coronavirus cases.
The AUD/USD pair came under modest bearish pressure during the Asian trading hours and dropped to a daily low of 0.6924. Although the pair started to pull away from its lows, it continues to trade in the negative territory near 0.6950 ahead of the American session.
AUD struggles to find demand on Friday
The risk-off market environment amid worries over the resurgence of coronavirus cases globally weighed on the AUD. Moreover, heightened political tensions with China on Australia’s decision to suspend the extradition treaty with Hong Kong continue to make it difficult for AUD/USD to gain traction.
In the second half of the day, investors will be paying close attention to Wall Street’s performance. On Thursday, major equity indexes suffered heavy losses and allowed the greenback to gather strength against its rivals.
At the moment, the S&P 500 futures are down 0.3% on the day and if US stocks extend the slide, the US Dollar Index (DXY) could end the week on strong footing and force the pair to push lower. The only data featured in the US economic docket will be the Producer Price Index (PPI). Ahead of this data, the DXY is down 0.1% on the day at 96.69.
Commenting on AUD/USD’s near-term outlook, “in our view investors are currently over-estimating the ability of the global economy to bounce back from the pandemic,” said Rabobank analysts. “We see a risk of a drop in sentiment by the end of the year which is likely to drag AUD/USD lower.”
Technical levels to watch for
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