AUD/USD extends recovery moves towards 0.6850 as RBA’s Lowe keeps the rate outlook intact
- AUD/USD stays pressured following RBA Governor Philip Lowe’s comments.
- Risk aversion exerts additional burden on the pair amid virus fears, Sino-American tension.
- PBOC’s interest rate decision, risk catalysts in the spotlight.
AUD/USD refreshes intraday top to 0.6834 during the early Monday’s Asian session. While the broad risk-aversion continues to weigh on the market’s risk barometer, the pair’s latest strength could be attributed to the RBA Governor Philip Lowe’s statements. The pair traders might now await the PBOC rate cut while keeping eyes on the risk factors for fresh impulse.
RBA Governor Philip Lowe recently participated in a panel discussion over the “Global Economy and COVID” at the ANU Crawford Leadership Forum. The central banker said favored the weak Australia Dollar (RBA) but refrained from altering his rate outlook while suggesting no rate cuts for years.
Read: RBA’s Lowe: Not surprising to see A$ where it is, though would like to see it lower
The AUD/USD pair fails to keep the pullback from a fresh one-week low of 0.6810 following the news. The broad risk aversion wave continues to exert downside pressure on the quote. Among the main factors contributing to the risk-off mood, fears of the coronavirus (COVID-19) wave 2.0 and tension between the US and China gain major attention.
Even if China defies pessimism concerning the recent increase in virus numbers from Beijing, the surge in the figures from the southern US states keeps the risk-tone sentiment heavy. Also negatively affecting the market mood could be rising figures from Germany and France, as well as some parts of Asia.
However, US President Donald Trump was cited, by Axios, avoiding sanctions on Chinese diplomats involved in the Xinjiang issue to safeguard the trade deal and probed the risk-off moves.
Amid all these catalysts, S&P 500 Futures recovery the early-day losses while the US 10-year Treasury yields also remain unchanged near 0.70%. However, Japan’s Nikkei begins the trading day with 0.50% losses while taking rounds to 22,372.
Having witnessed the initial reaction to the RBA Governor’s comments, the Aussie pair traders may await interest rate decision by the People’s Bank of China (PBOC). The Chinese central bank announced a surprise cut in the 14-day reverse repo rate during the last week, which in turn keeps hopes of a move alive for today’s results. Though, the effect of the rate cut, or not, might be ephemeral considering the present attention over the pandemic and Sino-American tussle.
During the US session, May month figures of the Chicago Fed National Activity Index and Existing Home Sales can offer intermediate moves to the pair.
Technical analysis
While a sustained break below 21-day SMA directs the sellers towards the last week’s low near 0.6775, 200-day SMA surrounding 0.6665 could question the pair’s further downside. Meanwhile, a clear break above the 21-day SMA level of 0.6835 might renew the quote’s rush in the direction to 0.7000 threshold.