- AUD / USD extends Tuesday’s 1.50% decline, affected by the strength of the USD.
- Risk aversion remains strong amid concerns about COVID, vaccines and China.
- All attention remains on the US data and the second day of Powell’s testimony.
The pair AUD / USD is struggling to regain the 0.7600 level at the start of the European session on Wednesday, after hitting a new seven-week low around the 0.7585-80 region earlier in the day.
The pair is extending the 1.50% selloff on Wednesday as it prevailing risk aversion in global markets continues to underpin US dollar safe haven demand.
A number of factors remain in play so far this week and that threaten global economic recovery, reducing investors’ appetite for perceived riskier assets, such as the Australian dollar.
These factors include the strengthening of the third wave of coronavirus in Europewhile concerns about the side effects of covid vaccines have led many key economies to halt their vaccination campaigns.
In addition to the nervousness of the markets, China’s growing concerns, in light that the United States, the European Union, the United Kingdom and Canada have sanctioned Chinese officials for human rights abuses, weigh on the Australian dollar.
Meanwhile, Bloomberg reports that Beijing has not met the US purchasing target agreed in phase one of the trade agreement, which also contributes to the fall of the AUD / USD.
On the other hand, markets have ignored the upbeat Australian trade data and the release of the manufacturing PMI, as a weakness in the NZD also remains a drag on the AUD.
Looking ahead, a host of critical US macroeconomic data will be released today ahead of Fed Chairman Jerome Powell’s second testimony. On Tuesday, Powell reiterated that an expected rise in inflation in the short term will be transitory.
AUD / USD technical levels
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