Bearish impulsivity remains intact above 0.7300 ahead of Australian retail sales
- AUD / USD is struggling to defend its corrective pullback from the year low.
- The bears take a break amid talks about the U.S. infrastructure bill and mixed virus updates.
- Local lockdowns could negatively impact Australian retail sales and the Westpac Leading Index for June.
- Qualitative enablers remain crucial for short-term direction.
AUD / USD fails to overcome its annual low of 0.7299, currently around 0.7330 Wednesday morning in Asia. Delta’s covid variant woes and reflation fears continue to weigh on market sentiment, despite slight consolidation moves during the US session amid stimulus concerns.
The Delta Covid strain defends the political doves …
With the virus variant spreading faster and challenging previous concerns about tightening policies, the easy money is expected to stay here for a long time, which in turn should have offered an invisible hand to the cautious market optimism in the middle. of the “same old people”.
Also on the upside could be the comments of US Senate Minority Leader Mitch McConnell, who said, according to Reuters, “Efforts to pass a bipartisan Senate infrastructure bill would not be slowed down if Democrats were losing a procedural vote to start debate on Wednesday. . “
Meanwhile, South Australia have joined the New South Wales and Victoria league to be under local lockdown even as Australian Health Minister Greg Hunt tweeted the arrival of a million Pfizer vaccines for Australians per week. On a related note, the UK unlock remains heavily criticized as the PM himself came into contact with an infected person, resulting in isolation, as national daily figures remain around early 2021 highs .
It should be noted that the escalation on the US-Chinese tug-of-war and mixed data from the US, the recently weak housing numbers, are playing a distant role.
In the midst of those games, the Wall Street benchmarks cut the heavy losses from the previous day and the 10-year US Treasury yields rose as well, providing a rebound off the multi-day low in AUD / USD prices. However, further advances for the Aussie pair depend on Australian preliminary retail sales readings for June, expected to be -0.5% vs. + 0.4% mo, as well as the Westpac Leading Index for June, – 0.06% of previous readings.
While the expected weakness in the economy may keep AUD / USD sellers hopeful, any improvement in covid conditions and US stimulus talks could provide sellers of the pair some breathing space.
AUD / USD declines need a daily close below 0.7340, including highs marked from the September-November 2020 high to October 2020 near 0.7245. On the contrary, recoveries require a breakout of 0.7410-15, including a peak in late 2020 and a low in early July 2021, to be considered promising.