- AUD/USD keeps late-Friday recovery from 0.7258 but stays capped below 0.7285.
- US inflation data came in positive, Brexit, US-China tussle also challenged the bulls.
- Oxford vaccine, AstraZeneca, to restart trials halted last week, China retaliated US sanctions.
- A light calendar at the week’s start will keep risk catalysts on the driver’s seat.
AUD/USD begins the week’s trading around 0.7280 at the start of Monday’s Asian session. The pair struggled for a clear direction during the last week as US dollar strength and risk factors kept the bears on the table but the bulls seemed not in a mood to leave the throne as data from China and home came out upbeat. The current week offers RBA minute and Aussie employment numbers that may offer fresh clues after the weekly Doji candlestick recently teased the bulls.
Risks remain as the key…
While RBA minutes, Australian jobs report, FOMC and Chinese Industrial Production could offer a comparatively busy week, major attention will be on how the tension between the US and China, as well as the UK and the European Union (EU), can recede. Also, the recently positive coronavirus (COVID-19) vaccine news may as well offer intermediate moves and will be the key to follow.
China’s sanctions on the US diplomats’ activities in the mainland and Hong Kong joins TikTok parent ByteDance’s refrain from transferring the algorithm behind the video-sharing app to keep the Trump administration at loggerheads with Beijing. On the other hand, diplomats from Britain will travel to Brussels during this week to restart the Brexit talks that stumbled last week. Though no major expectations are there for a solution as the key questions remain unsolved and the Tory government’s Internal Market Bill (IMB) irritated the bloc leaders. Elsewhere, AstraZeneca’s restart of the third trial may offer some positive news but should be taken with a pinch of salt amid the surge in the virus numbers.
Other than the aforementioned issues to observe, stimulus discussion between the US Republican and Democratic policymakers will also be the key after last week’s veto over President Donald Trump’s push for a $500 billion package.
Talking about the economics, the RBA minutes and Australian employment numbers are likely to not recall the buyers unless surprising markets. Though, China has that capacity considering the recently downbeat pandemic data. On the other hand, US Federal Open Market Commission (FOMC) may choose not to be too optimistic, despite the recent recovery in data, while numbers like Retail Sales can suggest lingering concerns amid the spread of the deadly virus.
On Monday, a light calendar in Asia and during the US session will keep traders watchful of the risk catalysts for fresh moves. Herein, market fears are likely to remain dominant unless equities manage to escape another tech rout. As a result, AUD/USD bulls should be careful.
Technical analysis
The pair’s choppy trading between 10-day and 21-day SMA, respectively around 0.7280 and 0.7260, since last Thursday. As a result, any decisive move, mostly up, beyond the stated range becomes necessary for the pair to register increased trading momentum. It should, however, be noted that the pair formed Doji candlestick on the weekly chart, which in turn suggests a reversal of the previous week’s bearish move from the multi-month high of 0.7416.
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