AUD/USD: Bears bet on coronavirus near four-month low to 0.6720, eyes on China PMI
- AUD/USD remains on the back foot around multi-week low despite the recent pullback.
- WHO declared the coronavirus outbreak an international emergency but the tone eased some fears.
- China’s PMIs will show the early impact of the outbreak but the Lunar New Year holidays might have a reason to doubt.
AUD/USD trades near 0.6720 at the start of Friday’s Asian session. The quote earlier slumped to the lowest since October 02, 2019, as fears of China’s coronavirus outbreak grew stronger, which led the World Health Organization (WHO) to term it as an international emergency. However, the quote consolidates losses recently ahead of key PMI data from its largest customer China.
Considering the global outbreak of China’s coronavirus, not to forget more than 8,000 confirmed cases in China with 100+ numbers outside, the WHO finally announced coronavirus as a global emergency. Though, the Geneva-based institute said they’re “not recommending ‘any restrictions’ on trade and travel”, which in turn eased some pain. Comments like, “we have not seen any deaths outside of China, for which we must all be grateful,” also eased some pain off-late.
Read: Breaking: Coronavirus is an international health emergency
Earlier during the day, the global leaders’ step back from China and the list of first cases in various countries kept the risk-tone under pressure.
That said, the US 10-year treasury yields refreshed the multi-week low under 1.60% whereas Wall Street failed to impress buyers despite the recent gain, mainly due to company results.
Elsewhere, the US GDP matched market expectations of reprinting 2.1% growth for the fourth quarter (Q4) of 2019.
Aussie traders will now concentrate on China’s January month NBS Manufacturing PMI and Non-Manufacturing PMI to get the fresh hints on how this epidemic has hit their largest customer. Forecast suggests no change in Non-Manufacturing PMI to 53.5 but the key Manufacturing PMI is expected to soften to 50.0 from 50.2 prior. That’s a close call for further weakness for the AUD/USD pair as it has recently recovered from below 50 level and another slump amid coronavirus fears could weigh on the quote. However, the fears could be challenged by the break time in Beijing.
Following that, the US Michigan Consumer Sentiment and Chicago PMI will be the keys to watch. However, coronavirus will keep the driver’s seat all the time.
Technical Analysis
Unless successfully breaking November month low near 0.6755, the pair’s risks of revisiting 0.6670 can’t be denied.