AUD/USD: Depressed near monthly low under 0.7200, eyes Aussie Retail Sales

  • AUD/USD fades pullback moves from multi-day low of 0.7153 around 0.7180/75.
  • Recovery in market sentiment fails to help the bulls as US dollar stays strong.
  • RBA Deputy Governor triggered hopes of central bank intervention despite only marking it as the option available to use.
  • Aussie PMIs, Preliminary Retail Sales for September are in the spotlight, for now.

AUD/USD eases to 0.7170 at the start of Wednesday’s Asian session. In doing so, the aussie pair begins the key day near the lowest levels since August 03, marked the previous day as traders await monthly PMI data and Retail Sales figures from the pacific major. The pair’s weakness could broadly be attributed to the US dollar gains as risk-recovery off-late failed to put a floor under the quote.

A long day ahead…

On Tuesday, RBA Deputy Governor Guy Debelle cited bond purchases and forex intervention as available options. The update extended the previous two-day losses of the Australian dollar. Also earlier weighing on the currency was the dull market sentiment as prepared remarks of the Fed Chair Powell’s testimony also joined the league of dovish central bankers. Also keeping the bears happy were the fears of escalations in the US-China tussle as America gained support from France, Germany and the UK to reject Beijing’s claim over the South China Sea in the United Nations (UN). It should, however, be noted that the market mood recovered afterward amid upbeat prints of US housing and Richmond Fed data.

On the other hand, the US dollar keeps the throne of the market leader. While portraying the same, the US dollar index printed a three-day winning streak to the late-July tops by the end of Tuesday’s American trading.

Other than the risks, central banks and the greenback moves, a light calendar and fears ahead of today’s key data also weighed on the sentiment and exerted downside pressure over the AUD/USD pair.

Against this backdrop, Wall Street managed to please the buyers after a few days of disappointment whereas the US 10-year Treasury yields also paused further downside around 0.67%.

Moving on, the preliminary readings of the Commonwealth Bank’s (CBA) September month PMIs will precede the initial estimation of the current month Retail Sales. While the activity numbers are likely to remain below 50 to suggest further contraction, recovery in the coronavirus (COVID-19) conditions in Victoria might have helped Retail Sales to inch up from 3.2% prior.

Given the latest swing in the market’s mood, positive numbers from home become necessary for AUD/USD bulls to avoid the further downside. Though, the investors’ love for the greenback, amid broad pessimism led by the pandemic, dims prospects of any such events during the busy day.

Technical analysis

The pair’s sustained trading below 50-day EMA, at 0.7175 now, will make it vulnerable to revisit the August 20 low near 0.7130 ahead of challenging the 0.7100 threshold. Meanwhile, an ascending trend line from August 03, currently around 0.7230, follows 0.7200 round-figures to restrict short-term AUD/USD upside.

Credit: FX Street

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