AUD/USD probes two-day winning streak, pressured above 0.6500 amid risk reset
- AUD/USD struggles to extend the previous two-day rise.
- US-China trade relations in doubts, tensions loom over Aussie-China future trade.
- A triple anti-viral drug offers promising results.
- A light economic calendar keeps trade/virus headlines in focus.
AUD/USD begins the trading week on a back foot while taking rounds to 0.6515, following the early-day drop from 0.6530, amid the initial Monday morning in Asia. The Aussie pair earlier cheered improvement in the US-China trade relations. Though, the recent noise concerning Aussie-China trade future and US President Donald Trump’s mixed messages concerning China keep markets guessing.
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Trade tension back in focus…
Having heard a few trade-positive headlines during last-week trade tussles are back to hound the market’s risk-tone.
While Friday’s talks between the US and Chinese policymakers struck an upbeat tone, US President Donald Trump’s recent messages have been mixed and renewed fears of the US-China trade war. The Republican leader said he is “having a very hard time with China” and that COVID-19 “sort of overrides so much”. He said, “I’m very torn, I have not decided yet if you want to know the truth.”
Further to highlight the trade war, the tension between Australia and China, as marked by China’s Global Times, also contribute to the Aussie pair’s fall. This seems to take clues from Australian PM Scott Morrison’s lobbying for an inquiry into the coronavirus (COVID-19) outbreak.
Alike trade news, virus headlines are also flashing mixed signals and exert downside pressure on the risks like the Australia dollar (AUD). Recent news suggests that some of the US policymakers including Vice President Mike Pence are self-isolating after an aide tested positive for the virus. On the contrary, news that a triple-drug is offering fast recovery from the virus infection also crossed wires.
Amid all these catalysts, risk-tone fails to carry the previous positive momentum and hence the S&P 500 Futures drop 0.50% to 2,917 by the press time.
Considering the lack of major data/events on the economic calendar, traders will keep eyes on the virus/trade updates for fresh impetus.
Technical analysis
Having failed to cross 100-day SMA, currently near 0.6540, AUD/USD can revisit 10-day SMA around 0.6480 whereas April high close to 0.6570 adds to the upside barrier.