- The AUD / USD bulls are catching their breath after a two-day winning streak.
- The losses in US dollars and the strength of Wall Street help the Aussie stay strong.
- Sino-US tensions over the South China Sea and viral woes in Europe are joining cautious action ahead of the key day.
- US GDP and the Fed Chairman’s Powell speech will be crucial to watch.
AUD / USD is trading near 0.7235 early Thursday morning in Asia. The Aussie pair became the biggest winner in the G10 the day before, but has been slow since the start of the day for Asian traders. As the greenback’s second day of losses joined the bullish performance of stocks and commodities to help the quotation on Wednesday, a lack of data / events and concerns ahead of key events could be cited as portraying the latest volatile moves.
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With the Jackson Hole Symposium grabbing the market’s full attention, traders await a speech by Federal Reserve Chairman Jerome Powell to be released at 2:00 p.m. GMT for clues to the September policy meeting. The latest rumors suggest that Average Inflation Targeting (AIT), a measure for easier monetary policy, is on the cards. However, discussions of growth stories cannot be ignored. It should also be noted that the US GDP for the second quarter (Q2), expected at -32.5% against -32.9%, precedes the speech and will also be the key to watch.
Global markets initially applauded the stabilization of the latest coronavirus (COVID-19) figures in Asia-Pacific and America on Wednesday before the mood deteriorated amid the surge in new cases in Europe. Recently, China also launched missiles in a military exercise near the South China Sea, while the US government prepares sanctions for companies supporting China to “reclaim and militarize the disputed outposts”, according to the US Department of Commerce. Even so, the hopes of the phase one deal fail to subside.
Against this backdrop, US stock indexes had another positive day with 10-year US Treasury yields closing in on 0.70% with slight gains at the end of Wednesday’s North American session. However, the S&P 500 Futures is down 0.14% to 3475 at press time.
Looking ahead, a light schedule will add to traders’ concerns ahead of the key session in the US. However, the market talk surrounding the US stimulus, the COVID-19 update and the brawl between the US and China could provide some intermediate entertainment.
The pair’s sustained breakout of 0.7200 allows it to refresh the annual high near 0.7280, with early month highs near 0.7245 acting as immediate resistance. Meanwhile, a 21-day EMA level of 0.7170 can keep bears entertained during cool dips beyond 0.7200.