AUD/USD stays depressed at five-week low under 0.7300 on multiple catalysts

• AUD/USD seesaws around early October levels following three-day downtrend.
• Aussie employment allows RBA to defend current rates contrary to inflation-backed rate hike push for Fed.
• Sino-American rivalry, Evergrande act as additional bearish factors.
• No major data/events in Asia highlight risk catalysts, US consumer sentiment figures will be important to watch.

AUD/USD holds onto bearish bias around the recently flashed three-week lows near 0.7285 during early Friday morning in Asia.

The Aussie pair dropped during the last three days as surprise negative Australian employment figures favored the pair’s latest downside amid the US bank holiday. Also pleasing the pair sellers were chatters concerning a likely monetary policy divide between the Reserve Bank of Australia (RBA) and the US Federal Reserve (Fed), as well as the US-China phase 1 deal and Evergrande.

Although AUD/USD bulls have reasons to argue with the October month contraction in Australia Employment change and a six-month high Unemployment Rate, they gain a little momentum as the Aussie jobs report shows a vast gap between market forecasts and actual data. The same enables the RBA to reiterate its rejection of the rate hike, also citing the inflation figures that are still to remain stable between the 2.0% and 3.0% target. On the contrary, the 31-year high US inflation puts the rate hike are on the Fed’s platter. Hence, the US Dollar Index (DXY) has this key reason to aim for a fresh high since July 2020 and extend the last two-day uptrend.

Other than the central bank actions, downbeat forecasts concerning the economic growth of Australia’s largest customer China, mainly due to credit crisis for real-estate companies and power cut problems, also weigh on the AUD/USD pair. Additionally, the US-China difference remains wide open despite the policymaker’s readiness to talk, virtually, over the phase 1 deal in the next week. The reason could be traced from US Trade Representative (USTR) Katherine Tai’s comments that cited weakness in China’s phase 1 performance.

It should be noted that an off in the US Treasury market and mixed performance of the Wall Street benchmarks couldn’t even stop the AUD/USD downside and hence signaling further weakness when the markets turn active.

Even so, a light calendar in the Asian session may allow the pair sellers to take a breather around the multi-day low unless the aforementioned risk catalysts flash any fresh negatives. On the data front, US Michigan Consumer Sentiment for November will be looked for additional signals of reflation and Fed rate hike.

Technical analysis

AUD/USD bears keep reins as a clear downside break of the 100-DMA and 50-DMA, close to 0.7366-72, precedes the latest weakness below multiple tops marked during late September around 0.7315. That being said, 61.8% Fibonacci retracement (Fibo.) of August-October upside, around 0.7275 and a three-month-old ascending support line near 0.7240 gains the market’s attention.