- AUD/USD snaps four-day uptrend, prints mild losses around two-month top.
- Victoria reports a big jump in virus cases, fading hopes of regional unlock.
- China–Taiwan tensions, pre-RBA caution add to the pair’s weakness.
- ANZ Job Advertisements, risk catalysts are the key, US holiday can restrict moves.
AUD/USD refreshes intraday low to 0.7447, down for the first day in five, during Monday’s Asian session. In doing so, the risk barometer pair bears the burden of the coronavirus fears at home and escalating geopolitical tussles abroad. It’s worth noting that the quote refreshed multi-day highs in recent days amid broad US dollar weakness and risk-on mood.
With the virus cases in Victoria rising to a fresh high in 13 months, by 246 at the latest, chatters over easing of the local lockdown measures, as signalled by Victorian Premier Daniel Andrews, per ABC News, fade their importance. The national count awaits figures from the largest state New South Wales to portray a clear picture of the coronavirus conditions at home.
The same joins fears of escalating border tensions between China and Taiwan. “Taiwan's air force scrambled on Sunday against renewed Chinese military activity, with its defence ministry reporting that 19 aircraft including nuclear-capable bombers had flown into Taiwan's air defence identification zone,” Reuters reports.
On Friday, the US employment report for August showed the headline figure Nonfarm Payrolls as quite disappointing, 235K versus 750K expected. The Unemployment Rate dropped to 5.2% from 5.4% and the Participation Rate remained unchanged at 61.7%. The downbeat figures propel chatters that the Federal Reserve (Fed) will have to wait before announcing the taper, adding strength to the AUD/USD bulls.
Amid these plays, S&P 500 Futures print mild losses, down 0.12% intraday, whereas the US 10-year Treasury yields remain indecisive amid off in the US.
Moving on, Australia’s ANZ Job Advertisements for August, prior -0.5 %, will be important to watch for intermediate direction. However, qualitative catalysts will be the key considering the US holiday and a light calendar elsewhere. Above all, this week’s Reserve Bank of Australia (RBA) meeting will be crucial for AUD/USD traders to watch.
Read: RBA: Australia faces renewed taper debate as sluggish recovery looms – Bloomberg
Technical analysis
A four-month-old descending resistance line near 0.7480 becomes a crucial hurdle for the AUD/USD bulls. However, bears may remain sceptical unless witnessing a daily closing below 0.7370, comprising a convergence of 50-DMA and a two-week-old support line.
