- AUD/USD renews downside bias towards yearly low after reversing the previous two-day gains.
- Local lockdowns in Australia extend, Nikkei hints at five years of activity restrictions based on vaccination status.
- US PPI, Fedspeak give fresh life to tapering concerns, mild optimism for vaccine, US-China bond fails to please the bulls.
- No major data ahead of US Michigan Consumer Sentiment Index eyed, risk catalysts are the key.
AUD/USD stays pressured around 0.7335-40, after reversing the previous two-day recovery, as Asian traders begin Friday’s task. The Aussie bears returned to the table amid fresh chatters over the US Fed’s tapering while the coronavirus concerns add strength to the downside bias. In doing so, the quote ignores slightly positive catalysts relating to the Sino-American headlines and vaccine optimism.
The US Producer Price Index (PPI) data for July renews reflation fears, which in turn solidify the Fed policymakers’ latest push for tapering. The latest PPI readings rose past market consensus in all categories while printing 1.0% figures for the heading figures and Core statistics on the MoM basis. On the contrary, Australia’s Consumer Inflation Expectations eased below 3.7% prior and 3.8% forecast to 3.3% for August.
Thursday’s comments from the Federal Reserve Bank of San Francisco President Mary C. Daly who said, per the Financial Times, “Tapering of asset purchases could start as soon as this year,” were the latest bold push to the monetary policy adjustments. Previously, Kansas City Fed President Esther George, Dallas Fed President Robert Kaplan and Richmond Fed President Thomas Barkin teased policy hawks.
Elsewhere, Australian Capital Territory (ACT) has gone into a seven-day lockdown the previous day and kept the covid woes on the table even as a jump in the New South Wales’ jabbing and a slightly easy national count battled the virus fears. It’s worth observing that Nikkei came out with the news suggesting around five years for Australia before fully opening up borders, based on the current vaccination rate and target of 80% prior to welcoming the total unlock.
It should be noted, however, that comments from Moderna suggesting their vaccine’s capacity to generate antibodies against COVID-19 variants for six months challenge AUD/USD sellers. Also on the positive side was the news that the US is committed to talks with China, per State Department Secretary Wendy Sherman’s statement to the Chinese ambassador.
Amid these plays, Wall Street benchmarks managed to print mild gains and the US 10-year Treasury yields rose two basis points (bps) to underpin the US Dollar Index (DXY).
Given the lack of major data/events in Asia, the recent tapering chatters and vaccine news may entertain AUD/USD traders ahead of the preliminary readings of the US Michigan Consumer Sentiment Index for August, expected to remain unchanged near 81.2.
Read: US Michigan Consumer Sentiment August Preview: Payrolls, inflation and the pandemic
Technical analysis
Failures to stay beyond a three-week-old ascending support line near 0.7365, not to forget the 0.7410-15 horizontal area established since early July, AUD/USD remains vulnerable to refresh the yearly low below the 0.7288 level.
Information on these pages contains forward-looking statements that involve risks and uncertainties. Markets and instruments profiled on this page are for informational purposes only and should not in any way come across as a recommendation to buy or sell in these assets. You should do your own thorough research before making any investment decisions. FXStreet does not in any way guarantee that this information is free from mistakes, errors, or material misstatements. It also does not guarantee that this information is of a timely nature. Investing in Open Markets involves a great deal of risk, including the loss of all or a portion of your investment, as well as emotional distress. All risks, losses and costs associated with investing, including total loss of principal, are your responsibility. The views and opinions expressed in this article are those of the authors and do not necessarily reflect the official policy or position of FXStreet nor its advertisers. The author will not be held responsible for information that is found at the end of links posted on this page.
If not otherwise explicitly mentioned in the body of the article, at the time of writing, the author has no position in any stock mentioned in this article and no business relationship with any company mentioned. The author has not received compensation for writing this article, other than from FXStreet.
FXStreet and the author do not provide personalized recommendations. The author makes no representations as to the accuracy, completeness, or suitability of this information. FXStreet and the author will not be liable for any errors, omissions or any losses, injuries or damages arising from this information and its display or use. Errors and omissions excepted.
The author and FXStreet are not registered investment advisors and nothing in this article is intended to be investment advice.
Recommended content
Editors’ Picks
EUR/USD breaks below 1.1000 on stellar NFP
The buying bias in the Greenback gathers extra pace on Friday after the US economy created far more jobs than initially estimated in September, dragging EUR/USD to the area of new lows near 1.0950.
GBP/USD breaches 1.3100 after encouraging US Payrolls
The continuation of the uptrend in the US Dollar motivates GBP/USD to accelerates its losses and breaches 1.3100 the figure in the wake of the release of US NFP.
Gold rebounds from daily lows and flirts with $2,670
Following a post-NFP dip to the $2,640 region, Gold prices now embarks on an acceptable rebound and retest the area of $2,670 per ounce troy despite the marked advance in the US Dollar and rising US yields across the board.
US Payrolls surge in September, as 50bp rate cut ruled out
US payrolls data surprised on the upside in September, rising by 254k, smashing expectations of a 150k rise. The unemployment rate fell to 4.1% from 4.2%, average hourly earnings increased to a 4% YoY rate and there was a 72k upwards revision to the previous two months’ payrolls numbers.
RBA widely expected to keep key interest rate unchanged amid persisting price pressures
The Reserve Bank of Australia is likely to continue bucking the trend adopted by major central banks of the dovish policy pivot, opting to maintain the policy for the seventh consecutive meeting on Tuesday.
Five best Forex brokers in 2024
VERIFIED Choosing the best Forex broker in 2024 requires careful consideration of certain essential factors. With the wide array of options available, it is crucial to find a broker that aligns with your trading style, experience level, and financial goals.