Australian Dollar, AUD/USD, Vaccines, AstraZeneca - Talking Points
- AstraZeneca road bump injects fear into markets as Europe’s vaccine rollout is further slowed
- Asia-Pacific markets are likely to move lower as the global economic recovery is put in jeopardy
- The risk-sensitive AUD/USD is in danger of taking out monthly lows and continuing lower
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Concern over the global economic recovery ramped up on Tuesday, causing a risk-off move to vibrate through markets as the global Covid-19 rollout hit a road bump. The National Institute of Allergy and Infection Diseases announced that AstraZeneca's disclosures may have included outdated data after receiving information from the company's independent data-monitoring board.
The vaccine blunder caused energy markets to plunge, with crude and brent oil prices sinking over 6%. The hard hit on oil prices sank the small-cap Russell 2000 index over 3.5% during Tuesday’s New York trading session. The tech-heavy Nasdaq pushed 0.53% lower while the S&P 500 and Dow Jones dropped 0.76% and 0.94%, respectively.
Elsewhere, the safe-haven US Dollar shifted higher in response to the risk aversion injected into markets. Investors are concerned that Europe’s economic reopening will be stalled due to the AstraZeneca shot being its primary vaccine in the continent. Treasuries also received strong bids across the curve, pushing yields lower.
Russell 2000, Crude Oil, US Dollar – 30 Minute Chart
Chart created with TradingView
Wednesday’s Asia-Pacific Outlook
Wednesday’s Asia-Pacific session will likely see a spillover of risk aversion from the US session. Japan’s Nikkei 225 moved 0.61% lower on Tuesday, while South Korea’s KOSPI recorded a 1.01% loss. In Hong Kong, the Hang Seng Index (HSI) fell 1.34%. The CSI 300 closed down by 0.95%, although it recovered into the latter half of the session from deeper losses.
Markit Economics reported March PMI data for Australia earlier today, which shows a recovery in the services sector. According to the DailyFX Economic Calendar, services PMI crossed the wires at 56.2 versus expectations of 53.8, and up from the prior month’s read of 53.4. However, the risk-sensitive Australian Dollar failed to react to the upbeat economic news.
The Australian economy has made a healthy recovery from the depths of the Covid-19 pandemic. Australia received a boost to its vaccine rollout efforts earlier this week when Canberra gave the go-ahead for local manufacturing of the AstraZeneca vaccine. However, as previously mentioned, the shot has run into road bumps, which may explain some of the weaknesses seen in the Aussie-Dollar. Treasury Secretary Steven Kennedy spoke this morning, stating that the economy has gained back 85% of the Covid-induced decline.
AUD/USD Technical Outlook
The Australian Dollar is extending an overnight move lower against the US Dollar, with its March lows in danger of giving out. AUD/USD’s 100-day Simple Moving Average (SMA) sits just below current prices and may offer an area of support. A break below that and the 0.76 psychological level will shift into focus. Coupled with a bearish MACD, AUD may continue sinking against the US Dollar.
AUD/USD Daily Chart
Chart created with TradingView
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--- Written by Thomas Westwater, Analyst for DailyFX.com
To contact Thomas, use the comments section below or @FxWestwateron Twitter