- AUD / USD consolidates Tuesday’s daily gains from the highest since March 10.
- The general weakness of the US dollar is helping the Australian pair overcome China’s negative trade measures.
- The American president, the president of the Fed, generally seems dull during their testimony, President Trump pushes for economic reopening.
- Second level Australian data, decision on PBOC rates and headlines remain the key.
The AUD / USD extends the withdrawal from the peak for several days while falling to 0.6530 at the start of Wednesday’s Asian session. Despite this, the Australian pair carries the break from the previous day above the 100-day SMA, the first since late January.
The US dollar remains depressed…
The US dollar index (DXY), an indicator of the US dollar against major currencies, fell to a two-week low on Tuesday while continuing to fall from the previous day. The greenback indicator may have suffered losses as Fed chairman Jerome Powell and US secretary of the treasury Steve Mnuchin did not please traders during their testimony. The weakness of the American currency could also contribute to a drop in American data and an escalation of tensions with China.
President Donald Trump signaled to freeze the country’s contribution to the World Health Organization (WHO), citing the institute as favoring China rather than investigating a virus epidemic. The same was strongly criticized by the dragon nation, as expected. On another page, President Trump signs a deregulation decree to push the economic recovery further.
The Australian-Chinese battle intensifies…
After announcing 80% tariffs on Australian barley, the dragon nation has made sure Australian policymakers regret their support for the investigation into the spread of the virus. Although China openly denies such claims, the markets are feeling new punitive measures in the form of new hardship for Australian wine, seafood, oatmeal, fruit and dairy products, according to Bloomberg.
While Australian diplomats have previously said they would reach the World Trade Organization (WTO) to tackle the problem, nothing more has happened on this note so far.
Elsewhere, global markets are awaiting further updates on the viral drug after Moderna’s optimistic statements propelled the risks earlier this week.
Amid all of these catalysts, yields on 10-year US Treasuries fell five basis points to 0.691%, while Wall Street also fell from the previous day’s eve to the end of Tuesday.
Although there is no major data to be released during the Asian session, Australia’s decision on the Westpac Index and the People’s Bank of China (PBOC) interest rate will be the key to watch. While the Aussie figure could slide below -0.85% in March, the PBOC recently surprised the markets without modifying its medium-term credit facility (MLF) rates and can maintain its attitude today . That said, the Australian pair remains mainly dependent on qualitative catalysts in the middle of a light calendar.
Unless falling below the 100-day SMA level of 0.6500, Australian bulls continue to aim for an upward trend line from March 13, now at 0.6665.