AUD/USD – Risk-On Boost Checked by China-Aussie Trade Spat

The Australian Dollar, boosted by the risk-on market stance, jumped 1.78% to 0.6525 against the Greenback in late New York from yesterday’s soggy opening at 0.6415. Meantime, news released this morning saw China confirming an 80.5% tariff on Australian barley as part of its retaliation to Aussie PM Scott Morrison’s push for a global investigation into the Covid-19 outbreak. Developments in trade, vaccines for the virus (either in the US and/or China), and Jerome Powell’s testimony later will influence the Battler.

FX Street AUDUSD Intraday Chart – 19 May 2020

The yield gap between US and Australian 10-year bonds has also narrowed to 17 basis points. Australia’s 10-year yield was last at 0.90% while US 10-year rates closed at 0.73%. This will prevent any meaningful Aussie rallies to the immediate resistance at 0.6560. The next resistance level can be found at 0.6600 cents (strong). Immediate support can be found at 0.6500 followed by 0.6470.
Look for a likely range trade today of 0.6450-0.6550. Prefer to sell rallies.

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