Search ForexCrunch
  • AUD/USD stays on the front foot near one week high of 0.7138, up for third day in a row.
  • US dollar’s heavy drop favors commodities and linked currencies.
  • Market sentiment sours before the presidential debate in America, challenges to US stimulus and virus woes also play their role.
  • China’s PMIs will also be important to watch.

AUD/USD kick-starts Wednesday’s key Asian session on a positive note around 0.7130. The aussie pair marked notable gains for the second consecutive day on Tuesday as the US dollar dropped across the board. While the coronavirus (COVID-19) woes kept supporting the safe-haven demand, traders turned cautious on the further greenback buying ahead of today’s first US presidential debate. Also crucial are China’s official and private manufacturing PMI data.

Risk dwindles ahead of a busy day…

US House Democrats’ easing stance on the COVID-19 relief package fails to get a welcome response from the White House, which in turn increases the market uncertainty. The Republicans counter offer the opposition’s $2.2 trillion stimulus bill, known as HEROES act, per Fox, with a $1.5-$1.6 trillion bundle.

COVID-19 conditions are worsening in Europe and the UK while stabilizing in the US. Local lockdowns are recently in fashion to avoid national emergencies but nothing encourages market players waiting for the vaccine.

Elsewhere, the British Members of Parliaments (MPs) recently passed the Internal Market Bill (IMB) in the House of Commons, pushing it to the House of Lords. The IMB is a big problem for the European Union (EU) and has been criticized harshly by the bloc leaders off-late. With the Brexit talks going on, this adds burden onto the risk-tone sentiment.

Talking about data, the US Consumer Confidence marked the biggest monthly gain in 17 years, to 101.8 in September from 86.3 in August.

Against this backdrop, Wall Street benchmarks flashed a below 0.50% losses whereas the US 10-year Treasury yields dropped by 1.2 basis points (bps) by the end of Tuesday’s North American session.

Looking forward, global market players are likely to remain cautious ahead of the key events at 01:00 GMT, namely the American presidential election debate and China’s NBS Manufacturing PMI for September. Also in the line is Beijing Caixin Manufacturing PMI, up for publishing at 01:45 GMT. While expectedly upbeat activity numbers from China may help AUD/USD to keep the latest positive performance, a softening stand of Republicans in the debate may trigger a safe-haven bid to the US dollar as Democrats will try hard to beat the Trump administration in all spheres and increase marked uncertainty.

Technical analysis

AUD/USD bulls are currently targeting a 50-day SMA level of 0.7205 prior to eyeing the previous support line stretched from August 03, at 0.7250 now. On the contrary, sellers won’t risk entries unless the quote slips below the 100-day SMA level of 0.7018 on a daily closing basis.