- AUD/USD stays mildly positive after a two-day winning streak.
- Global markets cheer upbeat economics from the powerhouses, coronavirus keeps spreading.
- Aussie retail sales, trade balance and NAB Business Confidence will be the immediate catalysts.
AUD/USD registers modest gains while keeping the 0.6740/50 range during the early Thursday morning in Asia. In doing so, the pair steps forward following the two days of gains amid risk-positive trade sentiment, upbeat US data.
US economics keep flashing green signals, others in the line don’t disappoint…
Be it upbeat ISM Non-Manufacturing PMI or an early signal to Friday’s NFP, not to forget Markit Services PMI, all data points signal that the world’s largest economy is in a good shape. The ADP Employment Change rose to the highest since 2015 whereas the ISM’s activity gauge surged past-55.00 forecast to mark the five-month top at 55.5. Following the release, San Francisco Federal Reserve Bank President Mary Daly praised the US fundamentals while also downplaying the impact of the coronavirus outbreak.
Elsewhere, data from the UK and EU also refrained from disappointing markets following downbeat China Caixin Services PMI and a modestly hawkish speech by the RBA Governor Philip Lowe.
Risk-on continues…
Positive data from the global powerhouse seems to restore investors’ confidence following liquidity infusion by China. This could also be witnessed in emerging market performance as well as recovery in equities following the early-week slump. Also supporting the risk, even if mildly, could be the latest news from the US Senate that acquitted President Donald Trump on charges of abuse of power.
Even so, fears of coronavirus stay on the cards as the death toll crossed 490 in China, as per the CNBC. Earlier on Wednesday, rumors crossed wires that the UK is near to finding a cure but the World Health Organization (WHO) leader Dr. Tedroz poured cold water on it.
While portraying the risk-tone, the US 10-year treasury yields rise another five basis points (bps), following an eight bps gain the previous day, to 1.65% by the end of Wednesday’s US session. Also, key benchmarks on Wall Street also neared record highs while keeping gains at the day’s end.
Traders will now take note of the second-tier Aussie data for intermediate direction. December month Trade Balance and Seasonally Adjusted Retail Sales will join National Australia Bank’s (NAB) Business Confidence for the fourth quarter (Q4). Forecasts suggest an improvement in trade balance to 5950M from 5800 whereas Retail Sales growth could decline with -0.20% versus 0.90% prior growth. However, NAB’s business sentiment gauge could please the Aussie buyers with +3 mark against -2 previous readout.
While the RBA recently shrugged of any rate change, it did show readiness to cut the rates if needed. As a result, bitter data could keep the risk of upcoming rate cuts high and will weigh on the AUD/USD pair.
Technical Analysis
A descending trend line since January 01, 2020, at 0.6800, followed by 100-day SMA around 0.6835, guard the near-term upside of the pair while sellers will enter below the monthly low surrounding 0.6680.
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