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  • AUD/USD retreated from 2-1/2-month tops amid a modest USD uptick.
  • Escalating US-China tensions revived the greenback’s safe-haven demand.
  • Investors now look forward to US economic releases for a fresh impetus.

The AUD/USD pair edged lower through the Asian session on Thursday and eroded a major part of the overnight positive move to the highest level since March 9. The pair was last seen consolidating near the lower end of its daily trading range, just above mid-0.6500s.

The pair witnessed some long-unwinding pressure on Thursday and for now, seems to have snapped two consecutive days of winning streak amid a goodish pickup in the US dollar demand. This comes amid fears about the second wave of coronavirus infections, which took its toll on the global risk sentiment and exerted some additional pressure on the perceived riskier currency – the aussie.

The greenback managed to find some support on Wednesday after minutes of the latest FOMC meeting sent a dovish message and warned that the coronavirus pandemic posed a severe economic threat. This coupled with the risk of a further escalation in the US-China tensions weighed on investors’ sentiment and further benefitted the greenback’s relative safe-haven status against its Australian counterpart.

It is worth reporting that the US Senate passed a bill that could block some Chinese companies from selling shares on the American stock exchanges. Adding to this, US President Donald Trump once again accused China of running a massive disinformation campaign and mishandling the coronavirus outbreak at the initial stage.

Meanwhile, the Australian dollar seemed rather unimpressed by the RBA Governor Philip Lowe’s optimistic comments earlier this Thursday, painting a rosy picture of the domestic economy. Speaking during a panel discussion at the Financial Services Institute of Australasia in Sydney, Lowe said that Australian financial system is resilient and is well placed to deal with COVID-19.

However, a fresh leg down in the US Treasury bond yields kept a lid on any strong gains for the USD. This, in turn, was seen as one of the key factors lending some support to the major. Even from a technical perspective, the overnight momentum added credence to Tuesday’s breakthrough 100-day SMA barrier, which now seems to support prospects for the emergence of some dip-buying at lower levels.

Moving ahead, market participants now look forward to the US economic docket – featuring the release of Philly Fed Manufacturing Index, Initial Weekly Jobless Claims and Flash Manufacturing PMI. The data might influence the USD price dynamics and produce some meaningful trading opportunities later during the early North American session.

Technical levels to watch