The Australian dollar (AUD) tried to bounce back at the outset in pre-market trading Wednesday, but fell off its tracks to sustain its recent consolidation, and see-sawed near the 0.6750 level before the final bell.
That being considered, it seems as if the Australian currency will continue to keep its downward shift unless some positive intervention gets in the way. Because of this, currency players expect to see the AUD extricate itself from this position, and hit the 0.68 handles.
Clearly, the market is highly levered to the Washington-Beijing trade drama, and therefore forex observers need to be wary that as long as things remain sideways, at least for now, traders should expect to see more selling pressure.
On the other side of the proverbial fence, US bond markets continue to bear the brunt as demand for treasuries rises. At the moment, forex traders should continue to make positive noise and fan interest to other major currencies, like the US dollar. Some analysts think it shouldn't be long before the money flows towards the USD.
As a result, some traders still could not be persuaded to buy the Australian dollar, thinking that its 50-day exponential moving average (EMA) above the 0.69 level is quite resistive. The AUD just does not have that rosy allure at this juncture and therefore buying the currency may not be a very smart move.
Currency experts also noted the 10-year and two-year Treasury yields on the greenback inverted for the first time in 12 years, and sparked global recession worries, discouraging traders from betting on riskier assets, such as the AUD and related equities.
Investors are now setting their sights on the speech by Reserve Bank of Australia Assistant Governor Guy Debelle, prior to its Employment Change and Unemployment Rate data. Forecasts, on the other hand, point to an improvement in Employment Change to 14K from 0.5K prior to a rate figure of 5.2 percent.
According to The Australian and New Zealand Banking Group, after a zero-employment growth in June, they estimate "a modest increase of 10k in July. However, if the participation rate stays in its record peaks, this could see the jobless rate climb to 5.3 percent."
Meanwhile, in China, currency managers have pegged a midpoint reference for the yuan at 7.0268 per the US greenback (CNY/USD pair) late Thursday - more robust compared to Wednesday's fixed pricing, though weaker than what Chinese market analysts had predicted at a midpoint of 7.0236 per USD, based on Reuters expectations.
