- AUD / USD was down from 2 1/2 month highs amid a slight rise in the dollar.
- The escalation of American-Chinese tensions has revived demand for refuge from the greenback.
- Investors are now eagerly awaiting US economic publications for further momentum.
AUD / USD fell slightly during Thursday’s Asian session and eroded much of the day’s positive trend from its highest since March 9. -0.6500s.
The pair has been under long-term pressure on Thursday and, for now, appears to have broken two consecutive days of winning streak amid a favorable recovery in demand for US dollars. This comes amid fears about the second wave of coronavirus infections, which wreaked havoc on global risk sentiment and put additional pressure on the perceived riskier currency – the Aussie.
The greenback managed to find support on Wednesday after the minutes of the last FOMC meeting sent a conciliatory message warning that the coronavirus pandemic was a serious economic threat. This, combined with the risk of a further escalation of US-China tensions, weighed on investor sentiment and also benefited the relative safe haven status of the greenback compared to its Australian counterpart.
It should be noted that the United States Senate has passed a bill that could prevent certain Chinese companies from selling stocks on American stock exchanges. Adding to that, US President Donald Trump has once again accused China of waging a massive misinformation campaign and mismanaging the early coronavirus epidemic.
Meanwhile, the Australian dollar appeared unimpressed with optimistic comments from RBA governor Philip Lowe earlier this Thursday, painting a rosy picture of the national economy. Speaking at a roundtable at the Financial Services Institute of Australasia in Sydney, Lowe said the Australian financial system is resilient and well placed to manage COVID-19.
However, a further step down in US Treasury bond yields has held back solid gains for the USD. This, in turn, was seen as one of the key factors providing some support to the greats. Even from a technical point of view, overnight momentum added credibility to Tuesday’s 100-day SMA revolutionary barrier, which now appears to support the prospects of some downward purchases emerging at levels lower.
Going forward, market players are now eagerly awaiting the US economic record – with the release of the Philly Fed Manufacturing Index, initial jobless weekly demand and the manufacturing PMI Flash. The data could influence the price dynamics in USD and generate significant trading opportunities later at the start of the North American session.