AUD/USD: Weak near 0.6750, shrugs off bearish Fed amid risk-off
- AUD/USD extends losses as Fed repeated the statement, Coronavirus-led risk aversion prevails.
- Global businesses, countries gradually step back from China.
- Second-tier Aussie data, risk headlines could entertain traders ahead of US GDP.
AUD/USD remains on the back foot while taking rounds to 0.6750 at the start of Thursday’s Asian session. The Aussie pair paid a little heed to the bearish Fed while taking more clues from the present risk-off sentiment led by China’s coronavirus.
Fed fails to entertain traders…
The US Federal Reserve reiterated its call to stay prepared, while announcing no change, in its latest monetary policy meeting. The central bank hiked interest rate on excess reserves (IOER) but that was nothing to care for. Governor Jerome Powell initially showed resentment over Inflation but later anticipated recovery. Though, concerns about manufacturing were a shade darker. All in all, it was not a major concern as markets nowadays are more interested in anything from China.
The globe cuts connections with China…
Following the US footsteps, Britain and Canada also curtailed their flights to and from China in order to avoid the outbreak of coronavirus. Companies like Google and Apple also flash signs of inactivity in Beijing. Also increasing the risk alarm is Chinese President Xi Jinping's order to military medical personnel to play a role in conquering the epidemic that has crossed the SARS outbreak of 2002/03.
With this, the market’s risk-tone remains a bit heavy and the US 10-year treasury yields decline six basis points to 1.58%, the fresh lows since October 09, 2019.
Not only bearish Fed, but traders also ignored weak data out of the US amid the rush to risk-safety. Wholesale Inventories dropped below 0.1% prior to -0.1% whereas Pending Home Sales registered the biggest monthly decline since 2010 while marking -4.9% MoM loss versus 0.5% forecast and 1.2% prior.
Moving on, the fourth quarter (Q4) import and export price indices from Australia, up for publishing at 00:30 GMT, will be the immediate catalyst. The data are expected to print 0.0% and -5.4% marks versus +0.4% and +1.3% respective priors for the Import Price Index and Export Price Index. Following that, headlines from China can entertain traders ahead of the US GDP for which markets are anticipating no change to 2.1% prior.
In addition to 0.6800 round-figure, 100-day SMA near 0.6840 also acts as the key nearby resistance. On the downside, 0.6700 and October 2019 bottom near 0.6670 gain the bears’ attention.