AUD/USD sellers attack 0.7100 on trade/political fears and bullish US Treasury yields

  • AUD/USD accepts offers to refresh intraday low, negates recovery moves early in the week.
  • Fears of US trade sanctions against China and Russian-Ukrainian squabbles join the new two-year high in US Treasury bond yields to favor the bears.
  • US trade numbers, risk catalysts to offer mid stops, US CPI is key.

AUD/USD refreshes its intraday low around 0.7100, down 0.15% intraday as the risk-averse mood gains ground heading into Tuesday’s European session.

Firmer US Treasury yields are attracting attention as they look for clues to the Australian pair’s latest weakness. That said, 10-year US Treasury yields rose around three basis points (bps) to refresh the two-year high at nearly 1.95%, while the five-year counterpart added four points. basis to renew the 18-month peak of 1.8050% at the latest. .

AUD/USD prices could also weigh on US-China trade relations, due to Australia’s close trading relationship with Beijing. While portraying trade pessimism in China, Reuters said: “China’s blue chip index fell to a 19-month low on Tuesday as new energy vehicle stocks led the losses as investors faltered. worried about the prospect of the US government adding more Chinese. entities to the export control list.

Elsewhere, fears of a Russian-Ukrainian war are battling US-Japan trade optimism, as well as covid fears in Hong Kong and Tokyo, to confuse market participants and support demand for U.S. dollars amid broad hawkish concerns over the March Fed rate hike.

Against this backdrop, US equities futures are showing slight losses around 4,470 at the latest, while Asia-Pacific equities are falling.

Looking ahead, risk catalysts will join the US Goods and Services Trade Balance for December, expected at -$83B vs. -$80.2B, to lead intraday moves.

Technical analysis

Failures to break above the 50-DMA level surrounding 0.7165 point AUD/USD sellers towards a 15-day-old support line near 0.7080.

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