Search ForexCrunch
  • AUD/USD fades upside momentum after recovering nearly half of Tuesday’s losses till 0.7152.
  • US President Donald Trump’s support measures help renew risk sentiment, FOMC minutes struck upbeat tone but policymakers expected stimulus.
  • EU tariffs on China, Taiwan and Indonesia renew trade war fears, virus woes remain on the table.
  • US Vice-Presidential Debate, China’s return will be eyed amid a light calendar in Asia.

AUD/USD consolidates the latest recovery moves around 0.7140 at the start of Thursday’s Asian session. Having lost over 80-pips on Tuesday, the quote managed to bounce off 0.7095 to 0.7152 the previous day. US President Trump’s stimulus efforts and the FOMC minutes could be cited as the main positive catalyst behind the rebound while the coronavirus (COVID-19) woes and fears of fresh trade war probe the optimists. Also, downbeat Australian data offered an additional challenge to the bulls.

Trump’s offers fail to convince optimists…

Having earlier called off over $2.0 trillion of stimulus talks, Trump took on twitter to announce spending on pay-check protection ($135bn), airlines ($25bn) and a standalone bill of $1200 stimulus checks for individuals. While the move offered immediate relief to markets, traders remain less hopeful for any actual help, even if the aid package crosses the Senate, before 2021. While citing this, analysts at the Australia and New Zealand Banking Group said, “Democrats are unlikely to play ball after saying they favor a comprehensive package over a piecemeal approach. The baseline scenario of no new stimulus ahead of the 3 November election is playing out. The question is: will there be any stimulus implemented before the new president’s inauguration on 20 January?”

Also probing the risk-takers were the fears of the rising COVID-19 numbers in the US and Europe, coupled with the European Union’s steel tariff on China, Australia’s largest customer.

Against this backdrop, Wall Street reversed the previous day’s losses whereas the US 10-year Treasury yields also gained 4.3 basis points to 0.783% by the end of Wednesday’s North American session.

Australia’s AiG Performance of Services Index weakened from 42.5 to 36.2 in September and offered an additional barrier to the AUD/USD buyers.

Moving on, Chinese players will be back after a one-week holiday and hence their reaction to the latest market events will be important to follow. Also, the faceoff between the Vice President nominees of Trump and Joe Biden will be the key to observe.

Technical analysis

AUD/USD buyers may remain cautious unless witnessing a daily close beyond 50-day SMA, currently around 0.7205.