Search ForexCrunch
  • AUD/USD pair slides as the dismal data for construction weighs.
  • COVID-19 cases are on a rise, putting pressure on the Aussie bulls.
  • Iron ore exports to China may dampen in the near future.
  • Australia can see a technical recession if coming Q2 GDP data comes negative.

The AUD/USD price outlook has lost traction as COVID-19 cases are rising and China’s iron import may dampen.

The AUD/USD pair is trading at 0.7241, down 0.23%, at the time of writing on Wednesday.

Are you interested to learn more about day trading brokers? Check our detailed guide-

Construction done in Australia fell 2.5% below consensus in the latest second quarter (Q2) and by 2.8% to 0.8% in the previous quarter. A major component of GDP, Reserve Bank of Australia (RBA) data reinforces the bank’s accommodative policies.

The AUD/USD bulls are also challenged by the Coronavirus updates on top of the data. According to ABC News, infection rates in Australia are at record highs, mostly in New South Wales (NSW). At the same time, the Chinese province of Hunan has removed all checkpoints and resumed normal public transport after reporting a low COVID-19 rate.

It is worth noting that the efforts of U.S. health officials like Dr Anthony Fauci in early 2022 to control COVID-19 have resulted in faster injections that have helped combat rising infection rates and multi-day high death tolls.

In the last month alone, the price of iron ore has fallen 40 percent, from a high of US$233 (A$325) per tonne to below US$130 (A$181).
Due to China’s new policies, including a cut in steel production, Australia’s most valuable export has been hit hard by the country’s new policies.

The Australian economy received a record A$149 billion from iron ore exports last fiscal year when prices skyrocketed, but the boom may fade as China reduces its reliance on iron ore.

Data for the June quarter of national accounts, including gross domestic product (GDP), will be published next week by the Bureau of Statistics.

Negative numbers indicate a technical recession (which requires two consecutive quarters of negative growth), which is almost certain to happen (since GDP will not be positive).

COVID to hit Fed’s tapering plan

The development of a new wave of coronavirus in the United States (on August 20, a record was set for daily infections of 319k against 300k at the beginning of January, with 52.8% of the population fully vaccinated) seriously shifted the expectations of market participants regarding the start of phasing out incentives. So now the reduction in the Fed’s assets purchase is expected not earlier than the 1st quarter of next year. This is what investors are now looking forward to hearing from Jerome Powell at the Jackson Hole conference on Friday.

Are you interested to learn more about forex bonuses? Check our detailed guide-

AUD/USD price technical outlook: Volume supporting bears

AUD/USD 4-hour price outlook
AUD/USD 4-hour price outlook

Yesterday, the AUD/USD price broke above the 50-period SMA on the 4-hour chart. However, the pair lacks follow-through momentum to gain further. The price slides back to the 50-period SMA, finding support around the level. However, the volume is turning negative for the Aussie. We may see a pullback towards the 20-period SMA at the 0.7200 area. On the upside, 0.7270 (yesterday’s highs) will provide immediate resistance.

Looking to trade forex now? Invest at eToro!

67% of retail investor accounts lose money when trading CFDs with this provider. You should consider whether you can afford to take the high risk of losing your money.