- AUD/USD is erasing more than 1% on Tuesday.
- Business Confidence in Australia improved slightly in May.
- US Dollar Index is clinging to modest daily gains below 97.00.
After closing the seventh straight day in the positive territory on Monday, the AUD/USD pair turned south on Tuesday and dropped to a daily low of 0.6898. Although the pair staged a technical rebound during the European session, it’s still losing 1.05% on the day at 0.6945.
AUD weakens on mixed data, risk aversion
The data from Australia on Tuesday showed that the National Bank of Australia’s (NAB) Business Confidence Index improved to -20 in May from -45 in April. However, the NAB’s Business Conditions Index came in a -24 and missed the market expectation of -16, making it difficult for the AUD to gather strength.
Meanwhile, escalating tensions between Australia and China seem to be weighing on the AUD as well. Earlier in the day, China’s Education Ministry in a statement urged Chinese students to carefully consider studying in Australia, citing racial incidents targeting Asians during COVID-19 outbreak.
On the other hand, the risk-averse market environment is helping the USD to gather strength as a safe-haven. With the US Dollar Index posting modest daily gains above 98.80, the bearish pressure on the pair remains intact ahead of the American session.
During the Asian trading hours on Wednesday, Westpac’s Consumer Confidence Index and Home Loans data will be featured in the Australian economic docket.
Technical levels to watch for
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