AUD/USD stays heavy below 0.6600, takes clues from China PPI, Asian stocks
- AUD/USD extends losses.
- The US dollar pullback, sluggish China data and Asian equities’ sustained risk aversion play their roles.
- US President Trump’s stimulus, coronavirus headlines will be the key.
Despite a modest risk recovery during early Asia, AUD/USD remains on the back foot to 0.6570 amid the initial trading hours on Tuesday. While expectations of further stimulus from the US and Japan triggered the earlier risk reset, losses by the Asian equities as well as the US dollar pullback seem to exert downside pressure on the pair off-late.
During the Coronavirus Task Force Briefings, US President Donald Trump signaled to take ‘major’ economic measures to counter the deadly virus while hinting at a press conference later in the day. US Vice President Mike Pence also favored the risk-on while saying that there are enough testing kits whereas comments from Japanese Economy Minister Taro Aso also helped the trading sentiment.
However, three more deaths in South Korea, as well as downbeat open of the Asian equities, weigh on the Aussie pair off-late.
Even so, the US 10-year treasury yields remain on the front foot towards recovering 15 basis points (bps) to 0.65% while S&P 500 Futures rise 2.5% to 2,815 by the press time.
The US dollar also bounces off the lows marked during late-September 2018 in anticipation of the Trump administration’s efforts to tame the widespread disease that has so far called for emergencies in more than 14 states.
Additionally, China’s February month PPI slipped below -0.3% forecast to -0.4%, versus 0.1% prior, and joined downbeat CPI to question the Aussie buyers.
Investors may now keep eyes on the stimulus form the US President Donald Trump as well as Japan and Australia to determine near-term direction. However, this doesn’t limit the importance of COVID-19 headlines as the catalyst.
A bearish spinning top seems to be under formation and could challenge the 21-day SMA near 0.6630, ahead of aiming early-February lows near 0.6660.