- AUD/USD remains under pressure near intraday lows on day of first loss in seven years.
- China’s trade balance will improve in USD terms and the CNY rate will ease, while both exports and imports will fall in April.
- Worsening sentiment and strong yields underpin the US dollar’s corrective rally ahead of major debt ceiling negotiations.
- Australia’s annual budget was due to be released around 9:30am GMT, and the near-term direction was in the spotlight.
AUD/USD is holding its lows near 0.6775, extending the pullback from intraday highs when it suffered its first loss for the seventh time early Tuesday morning. In doing so, the Australian currency pair justifies weaker Australian retail sales figures, along with mostly weak Chinese trade data for April.
China’s headline trade balance climbed to $90.21 billion in April, up from a forecast of $71.6 billion to $88.19 billion previously, while the CNY figure fell to market forecasts of $63.716 billion, down from a previous $60.101 billion to $618.44. billion dollars. However, it is worth noting that imports and exports in the same month fell in both the US dollar and the Chinese yuan (CNY).
Also read: China’s April trade balance: surplus widens amid another export surge
Earlier in the day, Australia’s first quarter (Q1) retail sales fell 0.6% against market forecasts of -0.4%, compared with a previous measurement of -0.2%. Meanwhile, his Westpac Consumer Confidence Index for May fell to -1.7% against his 9.4% earlier, weighting AUD/USD. price.
Apart from the pessimistic data from Australia and its biggest client, the AUD/USD is also weighed down by cautious mood ahead of Australia’s major annual budget and debt ceiling negotiations.
That said, U.S. President Joe Biden is gearing up to face Republican House Speaker Kevin McCarthy, Republican Senate Minority Leader Mitch McConnell, and top Democrats in Congress at the White House on Tuesday. . Ahead of the meeting, Reuters reports that U.S. Treasury Secretary Janet Yellen will personally reach out to business and financial leaders to explain the “devastating” impact of a U.S. debt default on the U.S. and global economy. Two sources familiar with the matter said Monday that they are sharing news that suggests they are doing so.
On another page, the Federal Reserve’s (Fed) Quarterly Bank Lending Survey finds that standards for commercial and industrial (C&I) lending to large and midsize businesses and small businesses tightened in the first quarter, with demand was shown to be weakening.
While depicting the mood, S&P 500 futures posted a modest loss of about 4,150, a one-in-three, while U.S. 10- and 2-year Treasury bond yields closed early Tuesday. It is struggling to extend its 3-day uptrend to.
Moreover, 10-year and 5-year breakeven inflation rates from St. Louis Federal Reserve (FRED) data suggest that pressure on the AUD/USD price could improve US inflation expectations. I have.
Against this backdrop, S&P 500 futures posted a modest loss at around 4,150, a one-in-three number, and U.S. 10- and 2-year Treasury bond yields closed Tuesday at Struggling to extend the 3-day uptrend in the early hours.
Looking ahead, the AUD/USD price is likely to bottom out on expectations of Australia’s first budget surplus in years and positive taxpayer-friendly measures. However, any disappointment is not to be taken lightly with market sentiment faltering ahead of US debt ceiling negotiations and US inflation data.
technical analysis
The 100-DMA hurdle at around 0.6790 joins the nearly overbought RSI (14) line on the daily chart to challenge the AUD/USD bull market. Adding strength to the upside filter is the horizontal area containing levels around 0.6800 marked since mid-February.
