- AUD/USD remains in the choppy range below 0.6900 after two-day declines.
- Fears of the coronavirus wave 2.0 weigh on the market’s risk-tone.
- Comments from the Fed’s Mester, USTR offered little surprise to the traders.
- Aussie employment data, virus updates in the spotlight.
AUD/USD offers less volatility while taking rounds to 0.6880/85 amid the early Thursday morning in Asia. The Aussie pair earlier flashed a negative daily closing, the second one in a row, as the market’s risk sentiment turned sour on the fresh coronavirus (COVID-19) updates. Traders are now waiting for the Australian employment report for May for immediate direction.
Virus fears dominate ahead of the Aussie data…
Although the US Trade Representative (USTR) Robert Lighthizer expects that China will meet its Phase One deal obligations, the AUD/USD pair shrugged off the news. Additionally, comments turning down the negative rate by US Federal Reserve Chairman Jerome Powell and Cleveland Federal Reserve President Loretta Mester also failed to entertain the markets. The reason could be traced by the gloomy mood amid increasing virus numbers and hospitalizations from the US states that follow Beijing’s worries of another round of the pandemic.
Texas COVID-19 cases have risen by 3.4%, above the seven-day average of 2.7% on Wednesday. Reports also took rounds of a leap by the virus numbers from Florida, Arizona and Oklahoma. On the other hand, Beijing undertook strict actions by cutting off the air travels and recalling the lockdowns to tame the deadly disease from spreading.
Elsewhere, the geopolitical tension in the Korean peninsula, as well as between India and China, offered background music to dent the trading sentiment. It should also be noted that a book from former US Security Advisor John Bolton on US President Donald Trump also weighed on the market’s mood.
Against this backdrop, Wall Street benchmarks offered mildly negative closings whereas US 10-year Treasury yields also marked the first loss in a week to 0.73% by the end of Wednesday.
Australian employment data for May, comprising Employment Change, Unemployment Rate and Participation Rate, will join the RBA Bulletin to offer immediate direction to the pair around 01:30 GMT on Thursday. Forecasts suggest recoveries in the jobs report due to the gradual reopening on the economies, which in turn might help the Aussie pair to recover the latest losses.
Additionally, the virus updates and the US Jobless Claims, coupled with Philadelphia Fed Manufacturing, might as well add to the market’s volatility.
Technical analysis
While an ascending trend line from May 18, at 0.6875 now, restricts the Aussie pair’s immediate downside, a one-week-old falling resistance line near 0.6935 seems to restrict the quote’s short-term advance. However, the bulls remain hopeful until the quote remains above the 200-day SMA level of 0.6665.
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