- AUD/USD pays a little heed to China’s trade figures for May.
- China Trade Balance eased below $50.5 B forecasts, Exports weakened but Imports increased.
- Downbeat market sentiment exerts additional pressure on the prices.
- Headlines concerning China trade, Aussie rating and Fed’s next moves entertain traders amid a quiet session.
AUD/USD stays on the back foot around 0.7235, down 0.05% intraday, following China’s trade numbers for May, published early Monday. In doing so, the risk gauge seems to take clues from the market’s downbeat sentiment amid a quiet session.
China’s headline Trade Balance stepped back from $50.50 B market consensus to $45.53 B. Details suggest the Exports dropped below 41.6% expected and 32.3% previous readouts to 27.6% but the Imports grew matched 51.5% upbeat forecasts.
Read: China’s May Trade Balance: Surplus and exports grow, miss estimates
Other than downbeat trade numbers from the largest trading partner, the risk-off mood also weigh on the AUD/USD prices, due to its risk-barometer status.
While the weekend comments from US Treasury Secretary Janet Yellen, praising rate hike, compressed Friday’s NFP-led market optimism, US Secretary of State Antony Blinken’s comments to hold China for covid origin also weigh on the market sentiment. On the same line, UK Trade Secretary Liz Truss also criticize Beijing for its pernicious trade misbehavior towards Canberra and worsened the risk appetite.
At home, the recent jump in Victoria’s coronavirus (COVID-19) cases to 11 battle’s S&P’s upward revision to Australia’s credit rating to AAA offer additional confusion in the markets and drag the AUD/USD prices.
Amid these plays, S&P 500 Futures drop 0.15% intraday while the US dollar index (DXY) benefits from its safe-haven appeal and firmer US Treasury yields.
Given the lack of major data/events, AUD/USD traders should pay attention to risk headlines for fresh impulse.
Technical analysis
The Aussie pair’s failure to cross a convergence of 21-day SMA and monthly trend line, around 0.7750, directs sellers toward the 50-day SMA level near 0.7725. However, a sluggish Momentum line and a horizontal area from early April, around 0.7675, may test the AUD/USD bears before directing them to the last week’s low near 0.7650-45.
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