Australian Dollar May Fall After Nasdaq Composite Tumbled into Close
Australian Dollar, AUD/USD, Nasdaq Composite, S&P 500 – Asia Pacific Market Open
- Australian Dollar trims gains as Nasdaq Composite slides into close
- Clear catalyst for late selloff seemed absent. Fauci, Fed commented
- Asia Pacific equities may decline as AUD/USD faces a bearish setup
Australian Dollar Wobbles as Nasdaq Composite, S&P 500 Sink in Final Hours of Trade
The sentiment-linked Australian Dollar wrapped up cautiously lower after trimming gains during Tuesday’s North American trading session. A late-day selloff unexpectedly accelerated losses on Wall Street, with the tech-heavy Nasdaq Composite declining the most over the course of 4 hours since March 25. The anti-risk Japanese Yen aimed slightly higher as the S&P 500 closed -2.05% to the downside.
A clear catalyst behind the rapid selloff seemed absent during the final hours of trade. What is becoming increasingly clear is the fading slope of appreciation in overall US equities. Some newswires attributed losses in stocks on earlier comments from Anthony Fauci, the key infectious disease expert in the US. He warned that states reopening too quickly could ‘set you back on the road on trying to get an economic recovery.
Meanwhile Federal Reserve officials offered their takes on the economy. Loretta Mester – President of the Cleveland branch – said that the unemployment rate could perhaps surpass 20 percent. She also reiterated that the Fed would try to use other tools before considering negative rates. Patrick Harker – President of the Philadelphia branch – said that a second wave of infections would ‘deal a hard hit’ to growth.
Wednesday’s Asia Pacific Trading Session
With that in mind, S&P 500 futures are pointing lower heading into Wednesday’s Asia Pacific trading session. That may speak to what can be a ‘risk-off’ tone to come. This may dampen the Australian Dollar while perhaps supporting the Japanese Yen. The New Zealand Dollar is eyeing the RBNZ monetary policy announcement. Rates are anticipated to be left at 0.25%, but markets may be looking for additional unconventional measures.
Australian Dollar Technical Analysis
The AUD/USD may be at risk to a turn lower down the road. The pair seems to be developing a Double Top which is a bearish reversal chart pattern. A break under support, which seems to lay between 0.6368 to 0.6390, could catalyze a pronounced selloff in the Aussie. Finding confirmation though may be key. Uptrend resumption entails taking out resistance at 0.6570.
AUD/USD – 4-Hour Chart
--- Written by Daniel Dubrovsky, Currency Analyst for DailyFX.com
To contact Daniel, use the comments section below or @ddubrovskyFX on Twitter
DailyFX provides forex news and technical analysis on the trends that influence the global currency markets.