AUD/USD stays above 0.7400 amid stimulus hopes, eyes China trade data
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AUD/USD stays above 0.7400 amid stimulus hopes, eyes China trade data

  • AUD/USD fades week-start recovery moves, eases from 0.7430
  • Australia’s AiG Performance of Services Index rose past-51.4 in November.
  • Stimulus hopes gain momentum, downbeat US employment report increases the push.
  • China trade figures for November, risk catalysts to remain in the spotlight.

AUD/USD seesaws around 0.7430 at the start of Monday’s Asian trading. In doing so, the quote keeps late Friday’s pullback from 0.7445 while ignoring the week-start corrective recovery from 0.7427. Although upbeat prints of second-tier Aussie data initially favored the pair, mixed catalysts concerning market risks, coupled with cautious sentiment ahead of China data, keep the pair traders indecisive.

Australia’s AiG Performance of Services Index for November crossed 51.4 prior with 52.9. Details of the macro data suggest that New Orders eased to 51.9 from 52.9 with Employment jumping above 53.1 previous to 56.4. Further, Wages receded from 59.3 to 57.5 during the stated month.

While the recovery in the employment statistics becomes the key component that keeps the AUD/USD bulls hopeful, also recently cited by the RBA, conditions are different in the US. As per the November month US jobs report, the headlines Nonfarm Payrolls dropped below 610K prior to 245K, much weaker than the nearly 470K forecast. However, the Unemployment Rate eased from 6.9% prior and 6.8% expected to 6.7%.

With the worrisome jobs report, the US policymakers are pushed for a much faster decision on the coronavirus (COVID-19) stimulus as the vaccine hopes are likely fading their strength to keep the markets up. The latest update suggests that the bipartisan proposal of $908 billion gains good support from the House members but the Senate Republican leader Mitch McConnell is still stopping the bill. The proposal comprises, “an extension of the Paycheck Protection Program for small businesses, a four-month extension of unemployment benefits, and $160 billion for state and local governments,” as per analysts at the Australia and New Zealand Banking Group (ANZ).

Other than the stimulus jitters, Brexit hopes are also dwindling and challenge the AUD/USD buyers trying to cheer the US dollar weakness near a two-year low.

Against this backdrop, Wall Street benchmarks flashed mild gains while closing near the record highs flashed earlier. Though, the risk-on mood seems to have recently eased amid nearness to the Brexit deadline and worsening of the covid ahead of the vaccine arrivals.

Other than the risk catalysts, China’s November month trade data will be the key to watch. While Trade Balance is expected to ease from $58.44B prior to $53.5B in the USD terms, Exports and Imports are likely to rise from 4.7% and 11.4% priors to 6.1% and 12% respectively. Although the recent Aussie-China tussle may dim the importance of the trade numbers from Australia’s largest customer, upbeat outcomes can help AUD/USD remain positive.

Technical analysis

August top near 0.7415, followed by the 0.7400 round-figure restricts the AUD/USD pair’s short-term downside. Until then, the bulls are directed towards July 2018 top surrounding 0.7485.


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