- AUD/USD wavers around multi-day bottom with cautious mood ahead of crucial data/events.
- China’s official PMIs came in better than expected in October, Caixin Manufacturing PMI awaited today.
- Virus woes, uncertainty over the US elections keep US dollar on the bull’s radar.
- RBA, US presidential election and the month-start data flow will keep markets busy.
AUD/USD seesaws around 0.7030 at the start of Monday’s Asian trading. Although the aussie pair refrains from extending Thursday’s downward trajectory, which challenged the lowest levels since July 20, bulls aren’t interested in entries as fears of the coronavirus (COVID-19) join the sober market conditions ahead of the US presidential election. Also challenging the traders is the upcoming monetary policy meeting by the Reserve Bank of Australia (RBA) while today’s second-tier data from Australia and China can offer immediate direction.
RBA’s rate cut or a blue wave?
As the covid wave 2.0 is pushing major European countries again into the national lockdowns, the UK be the latest one, fears of economic slowdown keeps the risks heavy as vaccines are awaited. Also contributing to the US dollar’s safe-haven demand is the delay in the American COVID-19 stimulus and recently upbeat data from the world’s largest economy.
Above all, markets turn dicey as the RBA is widely anticipated to take down the benchmark interest rate to the record low of 0.10% from 0.25% currently. Not only the dovish comments from Governor Philip Lowe but downbeat minutes also favor the rate cut forecasts. Additionally, traders are yet to confirm that the Democratic Party will retake controls in the US after November 03 elections, which in turn highlight the inaction before the crucial decision.
On the positive side, China’s official NBS Manufacturing and Non-Manufacturing PMIs for October flashed better than 51.3 and 52.1 respective forecasts to 51.4 and 56.2 respective figures. Further, virus conditions in Australia have started easing and Queensland is soothing border conditions.
Against this backdrop, risk barometers like equities and the Australian dollar remain pressured whereas the USD benefits from its risk-safety allure.
Moving on, Australia’s October month Commonwealth Bank Manufacturing PMI and TD Securities Inflation will precede September month’s Building Permits to entertain the AUD/USD traders. Though, major attention could be given to China’s Caixin Manufacturing PMI for October, expected to reprint 53.0 figures, for immediate direction. It should, however, be noted that nothing will beat the risk catalysts’ impact on the pair.
Technical analysis
The pair’s inability to break below the 0.7000 round-figure during September and October teases buyers to jostle with the previous support line stretched from mid-June, currently around 0.7080. Also acting as an upward hurdle is the 100-day EMA level of 0.7062.
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