- AUD/USD remains on the back foot, fades bounce off intraday low.
- Victoria, Queensland and NSW aim for one more week of covid-led lockdown, with easing restrictions for some parts.
- Australia AiG Performance of Services Index, ANZ Job Advertisements ease in June.
- FOMC minutes, covid headlines are the key for fresh impulse.
AUD/USD drops back below 0.7500, down 0.10% intraday around 0.7490, amid Wednesday’s Asian session. The pair slumped the most in one week the previous day amid a broad risk-off mood while the coronavirus (COVID-19) concerns at home and downbeat sentiment keep downside pressure on the quote so far today.
The fears of an economic slowdown, led by the recently weaker US data and the covid resurge, dragged risk appetite as US traders returned from a long weekend on Tuesday. That said, the ISM Services PMI dropped below 63.5 forecasts and 64.0 previous readouts to 60.10 while the fears of the covid strains got magnified on chatters over the strains’ vaccine resistance. It’s worth noting that the Reserve Bank of Australia’s (RBA) hawkish tilt couldn’t recall the bulls.
At home, Queensland, New South Wales (NSW) and Victoria are all likely to extend the virus-led activity restrictions for one more week as the nation jostles over inoculations. Even so, limits on some activities in restricted areas were eased of late.
Other than the US data and virus concerns, Aussie economics could also be held responsible for the AUD/USD pair’s latest weakness. AiG Performance of Services Index dropped below 61.2 prior to 57.8 in June whereas ANZ Job Advertisements marked 3.0% growth versus the downwardly revised previous reading of 6.8% during the stated month.
Amid these plays, S&P 500 Futures mark 0.10% intraday loss whereas the US 10-year Treasury yields remain pressured around 1.36%, following the heaviest drop since late February.
As the covid concerns remain elevated and challenge the recovery hopes, any further deterioration in the virus conditions at home or abroad will become detrimental for the AUD/USD prices. Also important to watch is the FOMC Minutes Statement for the latest meeting as bears seem to be more interested in hearing the wide divide among the policymakers.
Technical analysis
Failures to keep a month-old trend line breakout redirects AUD/USD bears to the yearly low of 0.7444 before highlights August 2020 top of 0.7416. Meanwhile, the stated resistance line around 0.7520, followed by the 200-DMA level of 0.7575 restricts short-term upside momentum.