- AUD/USD remains depressed below 0.7200 with RBA Governor’s downbeat comments.
- RBA’s Lowe defied any rate hike chances at least for the next three years.
- Delay in American stimulus, virus woes disappoint markets but the US dollar’s soft performance plays its role.
- September month’s Australian employment figures, China CPI will decorate economic calendar, risk catalysts are also important to follow.
Following its initial uptick to 0.7170, AUD/USD drops to 0.7160 as RBA Governor Philip Lowe speaks dovish during the early Thursday morning in Asia. Also weighing on the pair could be the risk-negative catalysts.
Read: RBA Lowe: Cash rate not expected to be raised for at least 3-years
Although RBA Governor Lowe’s comments offered AUD/USD a mild push to the north of 0.7160 to 0.7170, the risk barometer couldn’t ignore the broad market pessimism emanating from fewer odds of having the US coronavirus (COVID-19) stimulus before the election. Also contributing to the globally sober mood could be increasing numbers of the virus cases from Europe, which in turn highlights the chances of national lockdowns as an additional burden on the fragile economy.
Mnuchin deters stimulus hopes…
Having initially signaled that a COVID-19 aid package deal is difficult before the US presidential election, US Treasury Secretary Steve Mnuchin blamed the opposition Democratic Party for the delay in the talks. The White House member also cited US President Donald Trump’s push for the aid package despite reiterating the multiple barriers towards the successful agreement.
Additionally, the virus numbers are rising again in Europe despite the local lockdowns. Spain and France were the recent ones to have activity restriction announcements following the UK’s path of no national lockdowns. Though, any further deterioration in the conditions will push these developed nations towards recalling the national halt on the activities and may offer a strong negative to risk-tone.
It should be noted that China’s recent trade-negative terms with Australia and Brexit uncertainty are additional points that offer an additional burden to the market mood and AUD/USD.
Against this backdrop, Wall Street printed another negative closing while the US 10-year Treasury yields were also sluggish on Wednesday. Even so, the S&P 500 Futures print 0.10% gains amid the initial minutes of the Thursday’s start.
While the challenges to risk can keep AUD/USD pressured, today’s Aussie jobs report and Chinese inflation data will be the key to watch for immediate direction. Australia’s headlines Employment Change is to turn negative to -35K from +111K while the Unemployment Rate could also increase to 7.1% from 6.8% in September. On the other hand, China’s Consumer Price Index (CPI) may weaken to 1.8% YoY versus the previous 2.4% prior.
Read: Australian Employment Preview: September job losses to flag RBA rate cut
Technical analysis
While AUD/USD buyers are looking for a clear break beyond 0.7220 resistance, comprising a falling trend line from September 01, bears await downside below a three-week-old rising support line, at 0.7160 now.
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