AUD/USD clings to modest gains, just below 0.7100 mark
- The risk-on mood benefitted perceived riskier currencies and assisted AUD/USD to gain traction.
- Concerns about rising COVID-19 cases underpinned the safe-haven USD and capped the upside.
- Investors now look forward to the Fed Chair Jerome Powell’s speech for a fresh trading impetus.
The AUD/USD pair edged higher during the Asian session on Monday, albeit seemed struggling to capitalize on the move further beyond the 0.7100 mark.
Renewed hopes of additional US fiscal stimulus measures and expectations of a coronavirus vaccine by the end of this year provided a goodish lift to the global risk sentiment. This was evident from a positive tone around the equity markets, which benefitted the perceived riskier Australian dollar and assisted the AUD/USD pair to gain some positive traction on the first day of a new week.
However, concerns that a steep rise in new coronavirus cases could trigger renewed lockdown measures and hurt the ongoing recovery in the global economy continued benefitting the safe-haven US dollar. Adding to this, weaker-than-expected Chinese GDP print, along with expectations that the RBA will cut interest rates in November kept a lid on any strong gains for the AUD/USD pair.
In fact, China’s third-quarter GDP report came in to show that economic growth stood at 4.9% as against 5.2% expected. The disappointing reading largely offset mostly upbeat Retail Sales and Industrial Production figures, which recorded a growth of 3.3% and 6.9%, respectively in September.
Nevertheless, the AUD/USD pair, for now, seems to have snapped two consecutive days of the losing streak and stall last week's retracement slide from the vicinity of mid-0.7200s. That said, it will still be prudent to wait for some strong follow-through buying before positioning for any further near-term appreciating move amid absent relevant market-moving economic releases from the US.
Market participants now look forward to a scheduled speech by the Fed Chair Jerome Powell. Apart from this, the broader market risk sentiment will influence the USD price dynamics and produce some meaningful trading opportunities around the AUD/USD pair.
Technical levels to watch