AUD/USD bears flirt with 0.6400 at yearly low amid strong yields, downbeat RBA concerns
- AUD/USD fades corrective bounce off yearly low after posting eight-day losing streak.
- Upbeat US data, China woes underpin firmer yields and weigh on sentiment, as well as Aussie pair.
- Australia employment numbers favor dovish concerns about RBA and keep pair sellers hopeful.
- No major data/events on calendar for release but bond market moves will be crucial to watch for intraday directions.
AUD/USD licks its wounds at the lowest level in a year, especially following the successive fall in the last eight days, as traders seek more clues to extend the latest fall. With this, the Aussie pair seesaws around 0.6400 while fading the late Thursday’s corrective bounce off the yearly low during early Friday in Asia.
The Aussie pair’s latest fall could be linked to the downbeat Australian data and strong Treasury bond yields, as well as fears surrounding the biggest customer China. It’s worth noting that the firmer US macros recently renewed hawkish bias about the Fed and underpin the US Dollar’s strength, together with the firmer bond coupons, which in turn weighs on the AUD/USD price.
Recently, China’s second-large realtor, as well as the world's most heavily indebted property developer, Evergrande filed for protection from creditors in a US bankruptcy court on Thursday, per Reuters. The same escalate fears surrounding Australia’s biggest customer China as it battles with the slowing economic recovery and concerns about the financial health of China’s biggest realtor, namely Country Garden, propel market woes of late.
On Thursday, Australia’s headline Employment Change slumped to -14.6K for July on a seasonally adjusted basis versus 15.0K expected and 32.6K prior whereas the Unemployment Rate edges higher to 3.7% compared to the market’s expectations of once again witnessing a 3.5% figure.
With the looming economic fears about China and the downbeat Aussie jobs report, the Reserve Bank of Australia (RBA) might not risk another rate hike as the policymakers highlighted the data dependency in the latest Minutes, which in turn favors Aussie bears.
On the other hand, US Philadelphia Fed Manufacturing Survey marked the strongest print since April 2022, as well as the first positive outcome in a year, while rising to 12.0 for August from -13.5 prior and -10.0 expected. On the same line, the US Initial Jobless Claims also edged lower to 239K for the week ended on August 11 versus a revised up 250K prior and the market expectations of 240K. It should be noted that the four-week average of the Initial Jobless Claims and the weekly figures of the Continuing Claims for the period ended on August 04 edged higher.
It’s worth noting that the People’s Bank of China (PBOC) released its second-quarter monetary policy report and said it “will resolutely prevent over-adjustment risks of Yuan exchange rate.”
Amid these plays, Wall Street again closed in the red and the US 10-year Treasury bond yields march toward the levels marked in 2007. It should be noted that such high levels of yields previously triggered fears of global recession and drowned the riskier assets like equities and Australian Dollar.
Moving on, a light calendar may push the AUD/USD pair to watch for more risk catalysts for clear directions.
Technical analysis
AUD/USD pair’s sustained trading below a three-week-old falling resistance line, around 0.6440 by the press time, directs the bears toward the November 2022 low of near 0.6270.