The AUD/USD pair closed at 0.70244, after placing a high of 0.70865, and a low of 0.70055. Overall, the movement of the AUD/USD pair remained bearish throughout the day. In an earlier trading session, the AUD/USD pair surged above the 0.70800 level, as it attempted to reverse its five-day bearish streak. However, the struggle of the AUD/USD pair failed, as the gains in the US dollar continued, and the safe-haven appeal remained in the market.
Another reason behind the deep losses in the AUD/USD pair was the escalation in US-China tensions. The concerns of a new cold war, which were raised at the United Nations General Assembly (UNGA), exerted renewed pressure on the riskier Aussie. This led to the 6th consecutive day of losses in the AUD/USD pair on Friday.
At the UNGA meeting last week, the United States and China kept squabbling with each other on the issue of the coronavirus. Whereas, the US blamed China for the global spread of the coronavirus pandemic and called for holding the dragon nation accountable for the global economic losses, China rejected the blame, and accused the US of creating more troubles for the world.
Meanwhile, the UN Secretary-General, Antonio Guterres, pleaded for unity between member states and warned that the dispute between the world’s two largest economies was moving in the wrong direction, and that they were heading towards a new Cold War. These tensions kept the risk sentiment under pressure, and the riskier Aussie suffered, ultimately adding to the losses in the AUD/USD pair.
On the data front, the figures for the Core Durable Goods and the Durable Goods Orders for August were released on Friday. The reports showed that both had declined to 0.4% from the expected 1.0% and 1.1% respectively, weighing on the US dollar. However, this failed to reverse the downward movement of the AUD/USD pair. Despite negative macroeconomic data from the US, the greenback continued to gain, due to its safe-haven status. The rising uncertainty about the economic recovery, due to depressing macroeconomic figures, strengthened the safe-haven appeal. This weighed further on the AUD/USD pair, which dropped to its lowest level since July 20.
Meanwhile, Australia’s coronavirus situation is improving, as the daily numbers of infected people starts to decline. However, concerns were raised at to whether Australia will see a third wave of the coronavirus, as a professor and advisor to the WHO, Marylouise McLaws, said that if the restrictions were lifted too early, as a result of the decreased number of coronavirus infections, the pandemic could once again spread quickly. These worrying comments kept the local currency under pressure, and the AUD/USD continued to take a knock.
Daily Technical Levels
Pivot Point: 0.7038
The AUD/USD pair has bounced off a double bottom support area at the 0.7014 level, and now it is likely to face immediate resistance at 0.7084 and 0.71190, along with a support level of 0.7035. A bullish bias seems dominant today, over 0.7045. Good luck!