- AUD/USD consolidates the previous week’s recovery moves on virus news.
- Aussie Treasurer, NSW Premier cite covid-19 woes, Sydney witnesses more restrictions.
- US dollar picks up bids as US Core PCE Inflation renew reflation fears.
- Market sentiment amid a light calendar, Fedspeak eyed for fresh impulse.
AUD/USD snaps five-day uptrend, down 0.15% intraday near 0.7577, amid early Monday. The Aussie pair reflects the latest coronavirus (COVID-19) resurgence in Australia while portraying the latest losses. Also weighing on the quote could be the mixed sentiment and US dollar strength.
With 30 fresh infections in Australia’s New South Wales (NSW), the government announced extra measures to curb the virus resurgence. “An expanded lockdown now covers 5 million people in Greater Sydney, as well as the Blue Mountains, Central Coast and Wollongong. Cases of the highly infectious Delta variant now stand at 110,” said the BBC.
Adding to that, comments from NSW Premier Gladys Berejiklian signaling to prepare for virus cases to rise considerably also weigh on the AUD/USD prices. On the same line was Aussie Treasurer Josh Frydenberg as he said, “The country will only open its international borders if it is safe to do so and based on medical advice.”
It’s worth noting Reuters came out with the news, citing extracts of Aussie “intergenerational report,” while saying, “Australia lowered its projections on Sunday for population and economic growth over the next 40 years due to the impact of the COVID-19 pandemic.”
Elsewhere, the US dollar index (DXY) picks up bids near 91.88, up 0.07%, after marking the first weekly downside in five by the end of Friday. The greenback gauge seems to benefit from the US Core Personal Consumption Expenditures (PCE) Price Index, the Fed’s preferred gauge of Inflation, which jumped to the highest in the near three decades with 3.4% YoY figures in May.
Looking forward, a lack of major data/events could keep AUD/USD depressed ahead of the US session Fedspeak. Should the Fed policymakers raise doubts over their “transitory” outlook for inflation fears, the pair may have a further downside to print.
Technical analysis
AUD/USD eases from a two-week-old resistance line, near 0.7600, to aim for the last Monday’s top and the weekly support line, around 0.7545.