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AUD/USD: On the back foot near 0.6730, eyes on RBA’s Lowe’s speech, monetary policy statement

  • AUD/USD extends the previous day’s losses as the busy day begins.
  • Risk-takers catch a breath despite trade-positive headlines, US data continue to be strong.
  • RBA-related events are gaining the immediate attention, China/US statistics and coronavirus updates will be in the spotlight as well.

AUD/USD keeps the losses while being around 0.6730 at the start of Friday’s Asian session. The pair snapped the two-day winning streak on Thursday as trade sentiment showed worries for a longer-term impact of coronavirus while paying a little heed to the US-China phase-two deal positive news from Beijing. There are multiple key data/events from Australia, China and the US that together contribute Friday as the key day.

Risk-on paused despite upbeat trade headlines…

Markets mostly shrugged China’s announcement that it will halve the tariffs on some of the US goods and expect a good start of phase-two talks. This is mostly a part of the phase-one deal, already agreed, but shows that coronavirus isn’t limiting the dragon nation from performing its trade promises and the road to phase-two talks might not be too bumpy at the start.

The reason for the risk-takers’ break could be found in the already spreading coronavirus. Investors seem to now fear the coronavirus’ longer-run negative impacts than the earlier cited short-term epidemic. The contagion has so far infected +28,000 people in China and took lives of nearly 480.

Also adding brakes to the risk-on could be downbeat data from Eurozone and the ECB’s statement that it now has fewer means to counter the downturn, if it triggers.

While portraying the market’s risk-tone, the US 10-year treasury yields stay mostly unchanged to 1.65% whereas Wall Street also posted mild gains.

US data keeps the US dollar strong…

Be it weekly jobless claims or the fourth quarter (Q4) Nonfarm Productivity, the US numbers keep coming in green. Thursday’s economic calendar added optimism among the USD buyers while joining the pre-NFP positive indicators. The greenback also cheered downbeat performance of the German Factory Orders that triggered doubts over the Eurozone strength as compared to the US.

Eyes on RBA-related events for now…

The RBA’s hawkish halt and an absence of any downbeat statement from Governor Philip Lowe will be confirmed via today’s speech by the Governor, at 10:30 GMT, followed by the RBA’s monetary policy statement, up for publishing at 12:30.

The RBA Governor’s testimony before the House of Representatives’ Standing Committee on Economics will convey the actual picture of the latest Aussie data and how the RBA will act on them in 2020. The RBA monetary policy statement will shed light on the policymakers’ discussion while paying a little heed to the bushfires and coronavirus impact.

If the central bank reiterates its bullish call, it will give ammunition to the Aussie to reverse the previous day’s losses. Following that, data from China and the US will decorate the economic calendar. However, it’s the US NFP-day and the pre-data bleak might play its role.

Technical Analysis

The pair’s latest pullback shifts the market’s attention back to October 2019 low near 0.6670. On the contrary, a downward sloping trend line since the year’s start and 100-day SMA, around 0.6790 and 0.6830 respectively, can keep being near-term key resistances.

 

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