AUD/USD: On the back foot as global slowdown fears, trade war remain in the driver’s seat

• AUD/USD fails to recover as fears of global economic slowdown, trade war dominate market sentiment.
• Australia’s Construction Work Done becomes the immediate catalyst to watch.

Given the deepening of the US treasury yield curve inversion and the US-China trade crisis, AUD/USD continues to be sellers’ favorite while taking rounds to 0.6750 during early Wednesday morning in Asia.

In addition to the doubts on the US President Donald Trump’s statements concerning China’s two good calls brightening trade deal prospects, signals of a slowdown in the EU’s largest economy, Germany, also fuelled macro pessimism.

With this, the Wall Street closed in the red and bond yields also slumped. Herein, the inversion of the US two-year and 10-year treasury yield particularly gained much attention as it indicates the upcoming global recession. It should also be noted that the 10-year yields slumped beneath 1.5% to flash the fresh three-year low whereas 30-year counterpart dropped under 2.0%.

Other than the sentiment-driven fall, overall strength of the US Dollar (USD), on the back of upbeat consumer confidence and manufacturing activity numbers, also added weakness to the pair.

Moving on, second quarter (Q2) Construction Work Done data will be in the immediate focus of the traders, expectations -1.0% versus -1.9% prior, while trade/political news can keep busying the markets.

Technical Analysis

Repeated failures to clear 21-day simple moving average (SMA) level of 0.6775 drag the quote towards the mid-month low of 0.6735 whereas 0.6689 and 0.6677 can entertain sellers afterward. On the flip side, last week’s high of 0.6800 and August 08 top near 0.6820 could challenge buyers past-0.6775 immediate upside barrier.