- Aussie bulls bullied by Chinese retaliation on Australian abattoirs.
- Australian Treasurer tested for COVID-19 ahead of the budget release.
- Sellers continue to lurk near hourly-100-SMA, with focus on US CPI.
AUD/USD reverses the recovery rally from near the hourly 100-SMA at 0.6482, as the bears fight back control following fresh reports that the Australian Treasurer Josh Frydenberg was tested for the coronavirus infection after he coughed in parliament.
The sentiment around the aussie dollar is hit, as traders await the Australian Budget due to be released by Frydenberg. Also, the bearish pressure remains intact amid simmering Australian-Sino trade tension. The spot was dumped to a three-day low of 0.6432 in early Asia after China announced a ban on the meat imports from four Australian abattoirs, possibly retaliating to the OZ government’s calls the COVID-19 outbreak inquiry.
However, the Australian Trade Minister Simon Birmingham was quick to de-escalate the fresh tensions by saying that he “believes Australian meat exporters are having “minor technical breaches” with China.”
The conciliatory remarks helped the major to bounce back above the 0.6450 level but the further recovery was propelled by the Chinese Finance Ministry’s statement on the US-China Phase One trade deal.
The Ministry issued a second list of tariff waivers for some of the US goods on Tuesday while Beijing also raised its soybean import forecast for this year. Further, the advance in oil and gold prices also boosted the renewed upside in the spot.
Looking ahead, the upside attempts will likely remain limited in the pair, as risk-aversion dominates amid fears of the second wave of coronavirus and trade tensions. Markets await the budget release and US CPI data for fresh trading impetus.
AUD/USD technical levels to watch
At the press time, AUD/USD loses 0.30% to trade at 0.6468, with the upside attempts likely to face stiff resistance at the above-mentioned 100-hourly SMA. The recovery rally will gain momentum on a sustained break above the latter, opening doors towards 0.6503, the confluence of the 5-DMA and daily pivot point. To the downside, 20-DMA at 0.6431 will continue challenging the bears. A failure to defend it would bring the 0.6400 support back in play.
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