AUD/USD seesaws near 0.7300 after flashing three-week low on strong USD
- AUD/USD licks its wounds on the way to the second weekly fall.
- China-linked chatters and virus fears join Fed tapering woes to add to the US dollar’s safe-haven demand.
- Light calendar at home emphasizes risk catalysts for fresh impulse, US data important too.
AUD/USD consolidates recent losses close to 0.7300 during the second weekly fall amid Friday’s Asian session. The Aussie pair dropped to the lowest since August 27 the previous day amid broad US dollar strength, as well as downbeat catalysts at home. However, a lack of major directives and generally silent hours of Asia during this time seems to have underpinned the latest corrective pullback.
Strong prints of the US Retail Sales for August and Philadelphia Fed Manufacturing Index for September renewed Fed tapering concerns and helped the US Dollar Index (DXY) to post the strongest daily gains in a month on Thursday. That said, the US Retail Sales MoM jumped to the highest in five months while crossing expectations of -0.8% with +0.7% figures. Further, the Philly Fed gauge also rose strongly to 30.7 versus 19 forecast and 19.4 prior, marking the strongest figures in three months.
Read: Fed Preview: Three ways in which Powell could down the dollar, and none is the dot-plot
Other than the US data, surprise uptick in Australia’s national covid infections’ count to a one-week high, mainly backed by the biggest states (population-wise), also favored the rush to risk-safety that backed the US dollar bulls.
On the same line were chatters that the US, the UK and Australia are indirectly challenging China with securities pact and the US hosting of the UK, India, Australia and Japan for diplomatic talks the next week. Additionally, the Sino-American tussles, recently over Taiwan, add to the risk-off mood.
While portraying the sentiment, Wall Street closed mixed but the US 10-year Treasury yields rose 3.2 basis points (bps) to 1.336% by the end of Thursday’s North American session. Further, the S&P 500 Futures drop 0.05% by the press time.
Considering a lack of major data/events at home, the fears over the Fed’s dialing back of the easy-money during the next week’s Federal Open Market Committee (FOMC) could keep weighing on the AUD/USD prices. Also on the negative side are the COVID-19 fears and the US-China tension, not to forget Canberra-Beijing tussles.
However, today’s preliminary readings of the US Michigan Consumer Sentiment Index for September, expected 72.2 versus 70.3, may offer intermediate directions to the pair traders.
Read: US Michigan Consumer Sentiment Preview: Markets will have to look hard for positive signs
Technical analysis
Unless crossing a downward sloping trend line from September 07, around 0.7315 by the press time, even short-term AUD/USD bulls are less likely to turn. As a result, the quote’s gradual declines towards the late August low near 0.7220 gain more acceptances.