AUD/USD remains under pressure around 0.6720 with eyes on RBA minutes
- AUD/USD registers losses for the fourth day in a row.
- Coronavirus continues to hurt trade sentiment despite a light data flow.
- RBA minutes will be observed to reconfirm the optimistic tone.
- The US traders’ return, Empire State Manufacturing PMI will be observed.
AUD/USD declines to 0.6713 at the start of Tuesday’s Asian session. In doing so, the Aussie pair registers the fourth consecutive negative day and coronavirus is the catalyst to blame. Traders are now awaiting fresh clues from RBA minutes, up for publishing at 00:30 GMT, for near-term direction.
Coronavirus is the key…
Despite a light data flow and an absence of major catalysts, mainly due to the President’s Day holiday in the US, the Aussie pair failed to reverse the course of its declines.
The reason could be traced from the trade-negative comment from the IMF/Moody’s as well as the World Trade Organization’s (WTO) Good Trade barometer. The gauge to global trade slipped below 100 mark to 95.5 from 96.6 in November in its latest reading.
Additionally, comments from China’s leading expert tackling the epidemic, Zhong Nanshan, that the coronavirus will peak later in February in South China. Nationwide, the disease is expected to reach its peak in April also weighed on the sentiment.
Even so, the US off reduced the market’s reaction whereas China’s liquidity infusion and readiness to increase the money supply, together with Japan, pleased Asian equity traders.
While portraying the trade sentiment, the 10-year bund yield was broadly unchanged at -40.3bps by the end of Monday’s trading.
Eyes on RBA Minutes, China and the US return…
Looking forward, the Aussie traders will initially look for the RBA minutes to reconfirm the policymakers’ bullish bias. “The minutes of the RBA will be closely watched for perceived risks around the Bank’s more optimistic tone,” said analysts at the Australia and New Zealand Banking Group (ANZ).
Following that China's open and any new developments surrounding coronavirus will be the key to watch. Additionally, the US traders’ return from the extended weekend and Empire State Manufacturing Index for February, expected 5.0 versus 4.8 prior, could also provide fresh impulse.
Technical Analysis
Unless breaking a seven-week-old falling trend line and 21-day SMA, respectively near 0.6725 and 0.6752, the AUD/USD pair is less likely to avoid revisiting 0.6680/75 support-zone.