- AUD / USD starts the week with a downward spread of almost 10 pips.
- Risks are escalating as the Treasury-Fed fight joins the increase in covid cases.
- Vaccine hopes and the gradual reduction in Australia’s virus-related restrictions are positive for the pair.
- Preliminary activity numbers for November may provide additional entertainment.
After dropping to 0.7302 at the start of the Asian trading week, AUD / USD is hovering around 0.7300 during the first hour of movement. The Aussie pair applauded the weakness of the US dollar on Friday, associated with improving coronavirus (COVID-19) conditions at home. However, broad pessimism about the resurgence of covid and the tension between the US Federal Reserve and Treasury Secretary Steve Mnuchin topped the pair.
The bulls and the bears are jostling amid the weakness of the US dollar …
Although mixed catalysts challenge AUD / USD traders late, the general weakness of the US dollar has favored the listing. Among the many factors that negatively affect the SHU, the COVID-19 outbreak has been the main one. According to the latest Wall Street Journal (WSJ) update, daily new infections in the United States fell by 17,990 on Saturday from a daily high set on Friday. However, hospitalization continues to break records every day since November 10.
In addition to the COVID epidemic, tensions between the US Treasury and the Fed over the recall of $ 500 billion planned for emergency loan programs are also weighing on the risk tone of the market.
On the bright side, Australia recently started resuming virus-related business restrictions while suggesting additional tax help for domestic businesses. Recent comments from Australian Treasurer Josh Frydenberg point to an extension of the corporate tax break. In addition, Joe Biden’s proximity to the White House also offers a positive distance for the markets.
Against this backdrop, Wall Street closed in red as 10-year US Treasury yields also fell 3.1 basis points (bps) to 0.824% at the end of Friday.
Going forward, risk catalysts like virus updates and stimulus hints, coupled with the latest tension in the United States over the $ 500 billion recall, will keep the driver’s seat. However, preliminary impressions of the November activity figures may offer immediate direction. Among them, the Commonwealth Bank (CBA) PMIs will become the first to watch.
Although a symmetrical 1-week, 4-hour triangle restricts AUD / USD movements between 0.7320 and 0.7265, the monthly high and previous support line stretched from 02 November, around 0.7340 / 45, becomes a tough nut to crack for buyers. Meanwhile, a downside breakout of 0.7265 can quickly slide the quote towards the horizontal support of 0.7220 comprising the November 12 low and high marked on November 04.