AUD/USD: Bears battle 0.7300 on the way to yearly low after RBA Minutes
- AUD/USD remains on the back foot around intraday low, keeps the previous day’s bearish moves.
- Growing economic fears join geopolitical woes and downbeat data to weigh on the risk-barometer pair.
- US Retail Sales, qualitative factors will be the key drivers to follow for fresh impetus.
AUD/USD refreshes intraday low around 0.7320, down 0.16% on a day, during the two-day downtrend by early Tuesday. The Aussie pair recently reacted to the Minute Statement of the Reserve Bank of Australia’s (RBA) latest monetary meeting. Also dimming the importance of the RBA Minutes is the market’s attention to the risk catalysts.
The latest RBA minutes highlight the coronavirus impact on the Oz economy while saying, “Recent outbreaks of the delta variant of covid-19 had interrupted the recovery.”
Read: RBA Minutes: Recent outbreaks of the delta variant had interrupted the recovery
Talking about the risk catalysts, the Delta covid variant fears gain major attention due to the stronger characteristics that resist vaccines and lower jabbing. As per the latest covid data, Aussie figures remain elevated near August 2020 levels surrounding 500 daily cases whereas infections in China and the US have been rising towards the early 2021 levels of late.
With the virus resurgence, Aussie confidence in the policymakers seems to have declined. “Faith in the ability of government to handle the COVID-19 outbreak has deteriorated sharply, with the Morrison government, as well as the NSW and Queensland state governments, falling fastest,” said the Financial Review.
Not only the Australian politics but the geopolitical tensions emanating from the Middle East and Sino-American tussles, not to ignore the US-Iran drama, also weigh on the market sentiment. Also on the negative side could be the latest downbeat data from the US and China, suggesting a major challenge to the global economic recovery from the pandemic.
It should be noted that the uncertainty over the next moves of the Fed and cautious sentiment ahead of the US Retail Sales also weigh on the AUD/USD prices of late.
To portray the risk-off mood, the US 10-year Treasury yields remain pressured around 1.26%, down for the third consecutive day, while S&P 500 Futures step back from record top, down 0.18% by the press time.
While the risk catalysts keep the driver’s seat, US Retail Sales for July, expected -0.2% versus +0.6% prior, will be the key, followed by a speech from Fed Chair Jerome Powell at an online town hall event, should also be watched closely for clearer direction.
Also read: US Retail Sales Preview: Dollar booster? Low expectations, market mood point to a clear reaction
Technical analysis
AUD/USD sellers attack a monthly support line, near 0.7320, before challenging the yearly low around 0.7290-85. Alternatively, 21-DMA close to 0.7365, followed by 0.7410-15 area comprising multiple levels marked since early July, restrict the pair’s short-term recovery moves.