- AUD / USD keeps gains from the previous day’s recovery beyond 0.6450.
- Pending further stimulus, Wall Street wins in favor of the antipodeans.
- Commercial war, the wave of virus 2.0 limits the rise.
- Industrial production in China and retail sales can provide immediate direction, while headlines about trade and viruses remain the key.
AUD / USD hit an intraday high of 0.6474 in the middle of the initial Asian session on Friday. The pair recently benefited from the rating favoring further stimulus from the United States. However, the Chinese-American tension and US dollars the strength seems to level the pair higher. Industrial production and the next month of April could also chain the bulls. Retail sales data from China.
Risk activated or reset?
CNBC sources say the White House is likely to back up a new round of stimulus controls, as sentiment of market risk tone intensifies the resumption of the late session in the United States. The comments from the United States could also improve the chances of a new round of US stimulus. Dallas Fed Chairman Robert Kaplan and McConnell, majority leader in the United States Senate.
Despite this, the risks of deteriorating US-Chinese relations continue to limit immediate optimism. The U.S. Senate recently passed a bill that allows the Trump administration to impose sanctions on Chinese officials involved in the Xinjiang affair. In addition, a separate Republican bill is being prepared that will allow President Trump to sanction China if he does not cooperate in the investigation of the virus epidemic.
That said, 10-year US Treasury yields are gaining 0.4 basis points (bp) at 0.623% while the S&P 500 Futures also benefits from the sentiment of risk and increases by 0.13% to 2,851 at press time.
While current optimism should maintain the Aussie pair lighter, the economy of the biggest Chinese customer will be closely monitored for immediate direction. Among them, industrial production could go up from -1.1% to + 1.5% while retail sales could drop by 7.0% against -15.8% previously.
A confluence of 21-day SMA and an 18-day uptrend line, near 0.6440 now, provides immediate support for the pair before the monthly low near 0.6380. On the contrary, a weekly resistance nearly 0.6490 guards near recoveries before the May 11 high of 0.6562.