AUD/USD: Depressed below 0.6900 as risk aversion continues
- AUD/USD struggles to keep the bounce from a three-day low of 0.6835.
- Florida and Texas dethrone Beijing in virus concerns, Germany, Portugal also keep fears of wave 2.0 alive.
- Equities dwindle amid mixed data and geopolitical tension.
- A light calendar keeps the Aussie at the mercy of qualitative catalysts.
AUD/USD drops to 0.6850, fading the recovery moves from 0.6835, at the start of Friday’s Asian session. In doing so, the aussie pair extends the previous three-day losing streak while probing the weekly low.
Pandemic fears keep weighing the trading sentiment…
Although the latest coronavirus (COVID-19) figures from mainland China and Beijing, backed the Asian major’s claim that the situation in the capital is under control, statistics from the southern US back the fears of another virus wave. Additionally, numbers from Germany and Portugal, as well as Japan, also add to the worries concerning the deadly virus.
The COVID-19 cases in Florida crossed the weekly average of 3.0% to rise 3.9% on Thursday whereas Texas marked a record jump, by 3,516 to 100,000. Even so, the overall US pandemic cases rise 1.2%, the same as last week’s average.
Elsewhere, talks in Hawaii between US Secretary of State Mike Pompeo and China’s top diplomat Yang Jiechi failed to resolve the spat among the world’s top two economies. Even if both the countries chose to keep discussing the trade deal, their differences over Hong Kong and Xinjiang issues keep the geopolitical risks high. Additionally, weighing the risk-tone could be tension around Korea and between China and India.
On the data front, the US Jobless Claims dent the optimism spread through Philadelphia Fed Manufacturing Index. In doing so, the initial downbeat tone triggered through Aussie employment report for May gained additional strength to drag the AUD/USD prices down.
Against this backdrop, Wall Street benchmarks posted another day of losses, even if too mildly, while the US 10-year treasury yields also weakened to 0.71% by the end of Thursday.
Looking forward, a lack of major data/events on the economic calendar could keep the pair traders searching for virus, trade and political issues for immediate direction.
Technical analysis
One-week-old falling trend line favors the AUD/USD pair to keep the weakness after breaking monthly support, now resistance. The downbeat sentiment also takes clues from the MACD histogram that posts the strongest bearish signals since late-March. Even so, 21-day SMA near 0.6810 can offer immediate support to the quote ahead of dragging it to near 0.6665, comprising 200-day SMA. Meanwhile, buyers will wait for a clear break above 0.6930 for fresh entries while targeting 0.7000 threshold.