AUD/USD prints three-day downtrend below 0.7100 on mixed mood, softer Aussie Capex, US GDP eyed

  • AUD/USD stays around intraday low, down for the third consecutive day after challenging three-week high.
  • Recent headlines from China, Ukraine join downbeat Australia Private Capital Expenditure for Q1 to weigh on prices.
  • FOMC minutes, light calendar and off in Europe put a floor under the prices.

AUD/USD struggles to rebound from intraday low, down for the third consecutive day, as risk-negative headlines from China and Ukraine join downbeat Aussie data. That said, the quote remains pressured at around 0.7080 during Thursday’s Asian session.

Australia’s Private Capital Expenditure (Private Capex) data for the first quarter (Q1) of 2022 slumped to -0.3% versus 1.5% expected and 1.1% prior.

Elsewhere, comments from US Trade Representative General Counsel Greta Peisch suggesting, “Review of US-Sino tariffs is likely to take ‘months’,” becomes a fresh threat to the US-China trade relations. Previously, Beijing criticizes the US Draft Security Council resolution on North Korea and added strength to the Sino-American tensions. Also negative from China are the covid-led lockdowns that weigh on the world’s second-largest economy, also Australia’s biggest trading partner.

It’s worth noting that fears of global recession due to the Ukraine-Russia crisis, recently backed by World Bank President David Malpass also drag AUD/USD prices. “Russia’s war in Ukraine and its impact on food and energy prices, as well as the availability of fertilizer, could trigger a global recession,” said World Bank’s Malpass on Wednesday during an event hosted by the US Chamber of Commerce.

On Wednesday, the Federal Open Market Committee (FOMC) Minutes mentioned that the policymakers endorsed the idea of ​​50 basis points (bps) rate hikes for only the next couple of meetings and raised doubts on the rate-lift trajectory past September, which in turn favored sentiment.

Against this backdrop, the S&P 500 Futures print mild losses around 3,970 whereas the US 10-year Treasury yields again bounce off monthly low, after Wednesday’s failed attempt, up 2.5 basis points (bps) to 2.77% at the latest.

Looking forward, an off in major European bourses join a light calendar to restrict AUD/USD moves ahead of the second readings of the US Q1 2022 GDP, the annualized figure is expected to remain unchanged at -1.4%. Also important will be Personal Consumption Expenditure (PCE) details for April and weekly jobless claims.

Technical Analysis

AUD/USD sellers attack a two-week-old ascending trend line, around 0.7070, before targeting the 21-DMA level near 0.7040. Meanwhile, the recent swing high surrounding 0.7125-30 challenges the bulls.

It’s worth noting that the firmer MACD and steady RSI join the Aussie pair’s rebound from short-term key supports to keep buyers hopeful.


Leave a Comment