Bears Consolidate as Price Keep falling Lower
Bearish traders of the AUD/USD trading pair seem to be in total control while the quote is directed by the wave of risk-aversion in the way of the annual low point at 0.6966. This is a 1.10% drop in the vicinity of 0.6995. It was the situation as of press time in the early hours of Monday during the European session.
The most recent fall of the pair could be connected to the run-up of the US Dollar. This is mainly a result of the safe-haven appetite in the market and louder rumors that the Federal Reserve might not be able to stand by the plan to increase the interest rate by just 50 basis points.
AUD/USD price chart. Source TradingView
After saying that, it should be noted that the US Dollar index has renewed its highest point since November 2022. It is now up by 0.38% to rise to 104.10 most recently. Another factor that applies downward pressure on the AUD/USD pair is the irregular trade figures coming out of China.
The Chinese COVID Pressure
We should not be oblivious that the drop in the price of Australia’s major export to China, iron ore, equally added to the pressure on the pair. It should also be noted that the trade balance of the Chinese economy improved with regard to the US Dollar. It rose to $51.12 billion against $50.65 billion which was expected and the initial figure which was $47.38 billion.
In the Chinese Yuan, the figures are expressed as CNY325.08 billion against CNY441.88 billion which was expected, and the initial figure which was CNY300.58 billion. It should be noted that the price of iron ore dropped by 6.0% as activities were restricted in China as a result of the resurgence of COVID and subsequent lockdowns. This weighed heavily on the AUD/USD pair.
In other places, the fears that Russia would continue its military campaign deeper into Ukraine equally put additional pressure on the pair. The G7 has recently imposed more sanctions on Russia, nevertheless, the country stays on course to commemorate its victory during World War II. The celebration is planned to feature an elaborate military parade, and an official announcement to declare war on Ukraine.
The nearly most important part is the increasing fear of global stagnant inflation. Experts say this could happen as a result of increased inflation rates and tight monetary policies from central banks in Europe and North America. This factor stands as another catalyst that could further sink the AUD/USD pair.
In the midst of all these, the ten-year US Treasury bond yield is still strong close to the high levels since 2018. Stock futures have, however, slid by more than 1.0%
In addition, it is said that risk catalysts are capable of maintaining the AUD/USD price under high pressure toward the annual low points. This is as the sentiment report is set to be released by the National Australia Bank on Tuesday.