AUD/USD slips to a low of 0.7100 on the back of the headlines
The Australian dollar has had a wild ride so far today as it jumped to just above 0.7200 after a stronger jobs report before Westpac released a report saying that it anticipated further rate cuts by the RBA. The pair then fell towards the 100-hour MA (red line) where price was defended and traded around 0.7160 thereafter.
However, as China moved to "attack" Australia from an economic perspective, AUD/USD fell past both key hourly moving averages and is now threatening a more bearish near-term bias. Price is now hovering just over the 19 February lows and this could precipitate a further fall in the pair considering how sour relations have been since last year.
In case you missed the headlines from last year:
- Australia asks China to approve visit by foreign minister as diplomatic tensions heighten
- Australia bans China's Huawei from participating in mobile network infrastructure build
In particular, the Huawei incident is among one of the key reasons why China is starting to turn its back on Australia. You can say that China's move here was one that can be seen coming as highlighted here at the time:
One of the other key headlines on the day was Australia moving to ban Huawei from its market. Diplomatic relations between the two countries are already in a fragile state during recent months and the move here isn't going to help that. What's worse is that this is an economical move and something that could prompt China respond in due kind - and that presents a big question mark over future economic ties between the two.
There is mild support for AUD/USD around 0.7090 and then 0.7080 but if this is just the start of things to come from China, expect the outlook for the Australian dollar to grow even bleaker in the coming months and that will weigh on the currency further in the near-term as well.
Update: Price now falls below the 0.7100 handle to 0.7087.
