AUD/USD: Kick-starts the week with little action under 0.7200, eyes China CPI

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  • AUD/USD attempts consolidation of Friday’s losses from 0.7143.
  • US President Trump signed four executive orders, including unemployment benefits of $400.
  • American actions of sanctioning Hong Kong Leader and banning Chinese Tech giants TikTok and WeChat add to the US-China tussle.
  • A lack of major data at home precedes the key inflation numbers from China to direct immediate moves.

AUD/USD rises to 0.7160 at the start of the week’s Australian trading on Monday. In doing so, the aussie pair struggles to overcome four-day lows after Friday’s heavy losses, the biggest in two months. While the American President Donald Trump’s use of executive orders triggered the latest push for the US dollar, US employment data added weakness to the pair during late last week. Moving on, traders will keep eyes on the risk catalysts and China’s July month Consumer Price Index (CPI) and Producer Price Index (PPI) for fresh impetus.

Only Mr. Trump can do it…

It all started on early Friday when US President Trump signed executive orders to sanction Hong Kong Leader Carry Liam and a few others from the so-called “Chinese city”. The move gained strength from the Republican leaders’ restriction to do business with TikTok and WeChat after the next 45 days. The moves increased safe-haven demand of the US dollar and helped the greenback inch a bit farther, not so far, from the two year low.

As if it was needed, the US Nonfarm Payrolls (NFP) and Unemployment Rate also offered the strength to the pullback moves in the American currency. US NFP for grew 1.763 million while the Unemployment Rate stood at 10.2% during Friday’s reading.

While Trump’s crackdown on tech giants deterred Nasdaq and cut the recent equity market gains, US 10-year Treasury yields managed to extend recoveries beyond 0.56% by the end of the week.

During the weekend, the American national leader again used his Presidential powers to sign four more executive orders. This time, the Republican attacked the stimulus deadlock with unemployment claims and a temporary payroll tax deferral. Also, joining the line were orders to stop evictions from rental housing that has federal financial backing and helps in student loan.

Although the recent news suggests further hardships for the AUD/USD prices, traders will keep eyes on China’s inflation data for immediate direction. China’s July month CPI is expected to rise from 2.5% to 2.6% whereas PPI may overcome -3.0% prior to -2.5%. Although the upbeat forecast suggests the pair’s further recovery, any disappointment could be hard to digest. It’s worth mentioning that headlines concerning the coronavirus (COVID-19) and the US-China tension shouldn’t also be missed while trading the pair.

Technical analysis

Three failed attempts to stay past-0.7240 joins sluggish MACD on the daily chart to keep the bulls cautious unless the pair crosses the immediate upside hurdle. On the contrary, an ascending trend line from May 22, at 0.7115 now, followed by 0.7105-7100 area comprising 21-day EMA and 0.7100 round-figures, could keep the restricts the AUD/USD prices for a short-term.

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