Australian Dollar, Delta Variant, Chinese PMIs, AUD/USD -Talking Points
- Covid’s Delta variant becoming increasingly troublesome to recovery
- China’s NBS manufacturing PMI on tap for Wednesday’s APAC session
- AUD/USD dives below the 200-day SMA, more weakness ahead?
Wednesday’s Asia-Pacific Outlook
Risk-sensitive currencies, including the Australian Dollar, fell overnight as headwinds to the global economic recovery appear to be growing stronger. One of the main concerns is the highly transmissible Covid Delta variant that is quickly spreading around the globe. The virus strain has led to several regional lockdowns throughout Australia, including its most populated city Sydney.
While Australia has been successful in containing outbreaks, the country’s vaccination efforts have fallen short compared to other modern economies. Australian health policy adviser Bill Bowtell suggests shortening the timeline between the first and second AstraZeneca shots. Moreover, Mr. Bowtell predicts that due to government missteps on securing vaccines, more cities will come under lockdown.
Elsewhere, US health officials have become increasingly concerned over the Delta variants spread despite higher vaccination rates. Los Angeles County has issued a new voluntary mask mandate to help cull the spread and protect the population. Still, the Centers for Disease Control (CDC) expects the strain to become the dominant variant in the US.
Despite those growing fears in the US and elsewhere, Wall Street trading saw equity indexes move higher. The tech-heavy Nasdaq 100 index gained 0.33%. The safe-haven US Dollar also saw inflows, with the DXY index moving higher overnight. The Treasury market saw some slight buying pressure across the curve. The benchmark 10-year yield fell near half a percent.
Wednesday’s Asia-Pacific session will look to China, where the National Bureau of Statistics (NBS) is set to release purchasing managers’ index data for the manufacturing and services sectors. According to the DailyFX Economic Calendar, manufacturing PMI for June is expected to cross the wires at 50.8, a small drop from last month’s 51.0 reading.
AUD/USD Technical Outlook:
The Australian Dollar’s technical posture against the Greenback weakened overnight when the currency pair dove back below the 200-day Simple Moving Average (SMA). The pair is tracking lower toward the June swing low. If price breaks to a new monthly low, selling pressure may increase, perhaps driving AUD/USD to the September swing high outlined on the chart below.
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