AUD/USD: Awaits fresh clues to carry weakness below 0.7300
- AUD/USD remains pressured inside a choppy range between 0.7275 and 0.7280 as Tuesday’s Asian session begins.
- The absence of US traders, major data/events restrict market activity at the week’s start.
- Geopolitical tension between China and India joins the Sino-US tussle to weigh on the risk-tone.
- Aussie NAB Business Confidence, US NIFB Business Optimism Index, Consumer Credit Change to decorate the calendar.
AUD/USD takes rounds to 0.7275-80 as trading in Asia begins for Tuesday. The aussie pair dropped the previous day even as global markets stayed inactive amid the US Labor Day Holiday. The reason could be traced from mild risk-off and fears of RBA’s bearish moves. Also negatively affecting the pair’s performance could be the US dollar’s gains, mostly based on the downbeat performance of European data. The pair traders await fresh impetus from the return of the American traders but another day of a light calendar flashes warnings to optimists.
Bears are getting old and grumpy but not out…
A lack of fresh impulse seems to tire the AUD/USD sellers despite geopolitical fears helping them to keep the throne. News that the US is preparing to blacklist Beijing’s state-owned Semiconductor Manufacturing International Corporation (SMIC) added to the US-China tussle. Also fanning the market fears was the Chinese Foreign Ministry’s verbal retaliation to the American State Department spokesperson. “The Chinese Foreign Ministry slammed the US State Department spokesperson for calling so-called visa limitations on US media in China as a "reciprocal" move against the Trump administration's suppression of Chinese journalists in the US, calling it totally groundless and saying the US is blaming others when it should be blaming itself,” said the Global Times.
Not only the Sino-American play but the India-China border situations are also getting tensed and weigh on the market mood. As per the latest news from CGTN, “China’s military is demanding India censure its soldiers whom China says illegally crossed the Line of Actual Control (LAC) on Monday and fired warning shots on Chinese border patrol soldiers.”
Elsewhere, China’s upbeat trade numbers couldn’t please the aussie buyers and neither did news from Financial Review that Australia’s banks will be pushed to fund the government’s stimulus bill. Furthermore, calls that the RBA will soon adhere to further Quantitative Easing (QE) and a rate cut exert additional pressure on the quote.
Against this backdrop, the US dollar index (DXY) prints a five-day winning streak as weakness in the Euro ahead of the European Central Bank (ECB) meeting adds strength to the traders’ rush towards the greenback.
Moving on, National Australia Bank’s (NAB) Business Confidence and Business Conditions for Australia, expected -22 and +2 versus -14 and 0 respectively, will offer immediate direction ahead of the US second-tier data that are likely to print mixed results. However, the market players will be more concerned with the risk events and how the American traders respond to them for near-term direction.
Technical analysis
An area between 0.7230 and 0.7300, comprising 21-day and 10-day SMAs respectively, limits the pair’s immediate moves amid bearish bias.