- AUD/USD extends losses for the third consecutive day.
- A sustained south-run in oil prices keeps brightening the US dollar’s safe-haven allure.
- RBA minutes, Lowe played the bearish tunes on Tuesday.
- Aussie Westpac Leading Index will decorate the economic calendar, virus updates, oil moves will also be in focus.
AUD/USD begins Wednesday’s Asian session by stretching the previous two-day declines below 0.6300, currently at 0.6280. In addition to the ongoing commodity rout, led by oil slump, bearish statements from the RBA minutes and Governor Philip Lowe seems to exert downside pressure on the pair especially when the US dollar cheers its risk-safe nature.
Oil pressures commodity basket to south…
With the sustained slump in oil prices, global markets remain worried and kept exiting their orders relating to major commodities and linked currencies. The same fuelled the US dollar’s safe-haven demand, making the King Dollar dominate for one more day. As a result, the US dollar index, a gauge of the greenback’s strength against majors, surged to the fortnight high on Tuesday.
The resultant moves also negatively affected Wall Street and US bonds as the US equity benchmarks dropped more than 2.5% each while 10-year Treasury yields also dropped six basis points (bps) to 0.566% by the end of their rounds on Tuesday.
It’s worth mentioning that the US recently passed a $484 billion coronavirus bill for small business and hospital relief but the market’s reaction to the same is still awaited amid the early Asian hours.
Also should have supported the market’s trade sentiment could be the signals from the US President and Iraq to stabilize the oil prices.
RBA kept feeding the doves as well…
RBA minutes reiterated the board’s readiness for further easing whereas Governor Lowe signalled that the wages will be low and the current rates are likely to remain weak for a few years. Further, the Westpac cited the Governor’s first forecast during the crisis while saying, “The Governor forecast that the Australian economy would contract by 6% in 2020 compared to our forecast of minus 5%. We forecast a growth “bounce back” of around 5% in the second half of 2020, centered mainly on the December quarter.”
Moving on, Australia’s March month Westpac Leading Index, prior -0.42%, is likely to occupy the economic calendar. However, the major attention will be given to the oil price moves and the US efforts to help the world’s largest economy overcome the pandemic.
The break of a monthly support line directs the Aussie pair further down towards March-end top near 0.6215 whereas 200-bar SMA on the four-hour (H4) chart, close to 0.6185, can keep the bears in check afterward. Meanwhile, a weekly falling trend line near 0.6380 restricts the pair’s short-term recoveries.