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  • AUD/USD benefits from better than forecast Australian Trade Balance.
  • Risk-tone remains heavy amid US-China tussle, pre-event/data caution limit market moves.
  • China trade figures, US Jobless Claims and qualitative catalysts like trade/virus updates will be important to watch.

AUD/USD extends recoveries from three-day low while taking the bids near 0.6407, up 0.12% on a day, during the Asian session on Thursday. Aussie trade figures have been the latest catalyst for the pair’s U-turn amid risk-off mood.

Australia’s March month Trade Balance grew past-6800M to 10602M, a huge beat to 4361 prior. Further details suggest that Imports and Exports have slipped from 29% and 10% respective figures to 15.1% and -3.6% marks in that order.

Following the data, Aussie gains around 10-pips but fears of the US-China trade war, which once roiled markets and has much more strength now, considering the coronavirus (COVID-19), keep the quote’s recovery capped.

Market’s trade sentiment remains pressured amid the fresh fears concerning the US-China trade war after recent updates from the US have been worrisome. US President Donald Trump suggested taking a look back towards China’s performance on the deal while the White House expressed “frustration and disappointment”.

Also weighed on the risk-tone could be comments from US Secretary of State Mike Pompeo, which suggested another meddling by the US in Hong Kong-China issue that once hated by the dragon nation. It should also be noted that the US diplomat’s comments relating to China’s inaction over the virus outbreak should be weighed against the World Health Organization’s (WHO) latest statements, which suggest baseless claims.

Amid all these catalysts, US 10-year Treasury yields step back from three-week top to 0.69%, down 2.5 basis points (bps), whereas stocks in Asia register mild losses amid the initial trading session.

Even so, optimism surrounding the economic re-open on the US and Australia seems to challenge the rush to risk-safety ahead of the key US Jobless Claims and likely escalation of the US-China tension.

Technical analysis

A confluence of 21 and 50-day EMA around 0.6375 restricts the pair’s further downside, a break of which can drag the quote to April 21 low near 0.6255. On the contrary, 100-ay EMA near 0.6480 and April month top close to 0.6570 could cap the pair’s near-term upside.