AUD/USD: Bears eye two week low near 0.7200 amid risk-off mood
- AUD/USD remains on the back foot near the lowest since August 26.
- Sino-American tension, US stimulus deadlock and Brexit contribute majorly to risk aversion.
- Wall Street marked heavy losses led by Tesla, crude and gold also trade downwards.
- Australia’s Westpac Consumer Confidence and second-tier housing data can entertain short-term traders.
AUD/USD sellers catch a breather while taking rounds to 0.7210-20 trading range, currently around 0.7210, at the start of Wednesday’s Asian session. In doing so, the quote nears the lowest since late-August as challenges to the market’s risk-tone sentiment mount. The fundamentals also gained support from technical indicators as a break of an ascending trend line from June 30 exerts additional downside pressure on the aussie pair.
Pessimism all around…
Be it the US and India’s tough stand on China or rising calls of no-deal Brexit, not to forget further hardships for the American aid package, everything pushed global traders towards the risk-safety and weighed down the AUD/USD pair.
Having earlier increased hardships for Chinese reporters and citing a ban on cotton imports from Xinjiang, the Trump administration is all set to impose hefty tariffs on Chinese imports if Republicans keep the throne for the second term. On the other hand, Beijing retaliated to the US visa moves and warned New Delhi for border shows near the Line of Actual Control (LAC).
Further, the UK PM Boris Johnson’s spokesperson tried to placate speculations that the Tories aren’t mulling any changes to the Brexit withdrawal agreement but failed to keep the European Union (EU) policymakers happy during the initial eighth round of negotiations.
Elsewhere, House Speaker, Pelosi and Senate Majority Leader Mitch McConnell, harshly criticized the Republicans plan to table a $300B bill, much lesser than near $1.5 trillion recently suggested by the Democrats.
Additionally, heavy fall in Wall Street also portrayed the trade-negative sentiment. Equities were mostly down after Tesla dropped more than 17% as it couldn’t make it to S&P500.
While the risk-off mood drove markets towards the US dollar, receding expectations of the surge in the American inflation and upbeat prints of the US NFIB Small Business Optimism Index added strength to the greenback on Tuesday.
Moving on, the Aussie economic calendar may add worries for the pair buyers but major attention will be given to the risk catalysts. Hence, the pair’s further weakness is on the cards except for any positive surprise.
Technical analysis
A clear break below the 10-week-old support line, at 0.7228 now, drags the AUD/USD prices towards 0.7135-34 support confluence including 50-day SMA and August 20 lows.