- Antipodeans correct ahead of China data.
- Risk sentiment remains largely unchanged.
Not only failure to cross 50-day SMA but a holiday at Australia before data from the key customer seems also fetching the AUD/USD pair down to 0.7000 during initial trading on Monday.
Majority of the commodity-linked currencies, including the Australian Dollar (AUD), have recently managed to overcome looming uncertainty concerning China as weakness of the US Dollar (USD) has played a larger role in pleasing the Antipodeans.
The greenback weakness amplified on Friday after the headline nonfarm payrolls (NFP) strengthened calls for the Fed rate cut.
Adding to the pair’s pullback could be fears for another weak data from their largest customer China. The May month trade balance is likely to increase from $13.83 billion to $20.50 billion but imports and exports are expected to have contracted by -3.8% each from +4.0% and -2.7% respectively.
However, bears remain largely tamed as Australia enjoys an extended weekend due to Queen’s Birthday holiday.
Global risk tone seems to have benefited from the latest trade positive news from the US-Mexico front but uncertainty surrounding the future of US-China trade talks seem to limit the optimism. Macro risk barometer the US 10-year treasury yield remains modestly unchanged to 2.084% by the press time.
Technical Analysis
While 50-day simple moving average (SMA) level of 0.7020 and 0.7070 mark comprising 100-day SMA seems to limit the Aussie pair’s near-term upside, 0.6960 and 0.6940 are likely immediate supports that should be watched during the pair’s additional weakness from now.
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