AUD/USD: Bears battle 0.6950 as virus woes, US-China tussle intensify

AUD/USD remains pressured around 0.6950 at the start of the week’s trading on Monday. The aussie pair began the day with a gap-down of over 50 pips fr  |  12/07/2020 21:51
  • AUD/USD begins the week while keeping Friday's recovery moves from 0.6923.
  • Worsening coronavirus conditions in Australia and abroad hurt market sentiment.
  • Sino-American tension escalates with the US warning citizen of arbitrary arrests in China.
  • Virus, China updates remain as market drivers amid a light calendar.

AUD/USD remains pressured around 0.6950 at the start of the week’s trading on Monday. The aussie pair began the day near to Friday’s closing around mid-0.6900 area despite risk-averse news. With this, the quote snaps the previous two-day losing streak and marks further easing from the one-month top above 0.7000 flashed on Thursday.

Increasing numbers of the coronavirus (COVID-19) joins further tension between the US and China to challenge the latest moves of the AUD/USD pair. However, news that the Trump administration has a few options to punish Beijing, over the Hong Kong security law, puts a floor under the pair.

COVID-19 refrains from easing and so does Sino-American tussle…

In its latest updates, per Reuters, the World Health Organization (WHO) announces the record high daily new cases of the pandemic on Sunday. The Global institute reports the numbers rose by 230,370 with around 5,000 a day death toll due to the deadly virus. The figures broke Friday’s record of 228,102.

Global figures cross over 13 million with more than 565,000 people killed in the last seven months by the virus, per Reuters’ tally. The US leads the run, unfortunately, while Brazil and India following the suit. The latest figures from Florida suggest over 15,000 new cases on Sunday amid further push for schools re-open and anti-mask protests.

At home, virus conditions in Victoria continue to get worse with the weekly count of 273. Further, cases from New South Wales, (NSW) include nine cases from the outbreak at the Sydney pub. It should also be noted that the Aussie government hardened state-border restrictions and stepped back on easing the lockdown restrictions during the last week.

Other than the virus, fears of a full-fledged war among the world’s top two economies also weigh on the market mood. In the latest update, the Trump administration followed the footsteps of Aussie policymakers while warning their citizens living in China of arbitrary arrest. Additionally, the US government is also in the process of announcing additional punitive measures in Beijing due to the Hong Kong security law. Though, news that the Trump administration has a few options, considering Hong Kong’s financial status, per the Wall Street Journal, battle risk-off sentiment.

It should be noted that the talks of a virus vaccine getting positive results helped marked shrug off the fears of the resurgence during the late last week. Also building the mood were hopes of further stimulus from the US amid downbeat Producer Price Index (PPI), also backed by the comments from the President and CEO of the Federal Reserve Bank of Dallas Robert Kaplan.

Looking forward, a lack of major data/events keep the markets looking for more updates on the COVID-19 and the Sino-American tension for fresh impulse.

Technical analysis

While 0.7000 becomes immediate upside barrier, sellers might not risk-taking bigger positions unless witnessing a break of the month-old support line, currently around 0.6890.

 

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