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  • AUD/USD awaits fresh clues to extend the pullback from the multi-year low.
  • The US dollar registers broad losses amid weak equities, bonds and mixed data.
  • Coronavirus fears prevail, many first cases and government efforts keep the pandemic on the driver’s seat.
  • A light economic calendar will continue highlighting COVID-19 headlines as the main catalyst.

AUD/USD clings to 0.6580 at the start of Friday’s Asian session. That said, the pair registered a pullback from the 11-year low of 0.6541 to 0.6480 during the previous day. The reason could be traced to broad US dollar weakness. Though, the fears concerning coronavirus (COVID-19) remain on the cards and will direct near-term market moves.

The King dollar dives…

The US dollar marked noticeable losses across the board on Thursday and the reason to blame are slumps in the equities as well as bonds. The Wall Street benchmarks marked nearly 4.0% losses each while the 10-year treasury yields flashed the fresh record low surrounding 1.244%, currently down four basis points (bps) around 1.271%.

On the economic front, the US Durable Goods Orders registered mixed readings with the headlines figures declining less than expected to -0.20% while core numbers also posting upbeat marks but failing to ignore momentum in investment. Further, the Atlanta Fed GDPNow estimate rose to 2.7% versus 2.6% whereas the Preliminary Q4 GDP matched the advance forecast of 2.1%. From Australia, a dip in the Private Capital Expenditures, to -2.8% from +0.4% forecast, occupied the line.

Coronavirus keeps spreading outside China…

With the numbers of first-hand COVID-19 victims increase, traders keep worrying about the pandemic and so does the global political/economic institutions that crossed wires off-late. Be it Daimler, German Steel Production or Wells Fargo, not to forget comments from French President, WHO and ECB policymakers, everybody now accepts that the Chinese virus is a fearsome catalyst and could weigh the global economy as well as supply chain.

It should also be noted that the Australia PM Morrison also warned that the coronavirus outbreak is likely a pandemic.

The latest news came from the US Centers for Disease Control and Prevention (CDC) that showed the plans to increase testing of the COVID-19.

Moving on…

Given the lack of major data on the economic calendar, traders will keep eyes on the coronavirus headlines for fresh impulse. Any news of the cure can help strengthen the pullback.

Technical Analysis

Unless bouncing back beyond February 07 low of 0.6750, prices are less likely to extend the recent pullback. As a result, sellers will be on the lookout for entry below 0.6540 while aiming 0.6500 round figure and a downward sloping trend line connecting lows marked on January 07 and 31, at 0.6495.