AUDUSD drops on firmer covid fears, downbeat Aussie data and RBA’s Lowe

Record high daily infections from China joined public protests to ease the zero-covid policy to amplify the risk-off mood during early Monday. As a result, the US Dollar managed to extend the previous day’s corrective pullback and the AUDUSD justifies its risk-barometer status.

Australia’s disappointing Retail Sales and downbeat comments from RBA Governor Philip Lowe exerted additional downside pressure on the Aussie pair.

Further, the NZDUSD came in second in the bear’s run whereas Brent oil refreshed its yearly low amid the sour sentiment. Even so, the USDJPY bucked the trend amid softer US Treasury yields.

Cryptocurrencies also remain pressured as risk aversion move funds off the already-struggling BTCUSD and ETHUSD, especially after the FTX fiasco.

Following are the latest moves of the key assets:

• Brent oil drops for the third consecutive day to refresh yearly low near $81.50.
• Gold extends the previous day’s pullback with mild losses around $1,750.
• USD Index struggles to cheer risk-off mood above 106.00.
• Wall Street closed mixed amid festive mood but equities in the UK and Europe begins the key week in the red zone.
• BTCUSD prints five-day downtrend near $16,200 while ETHUSD drops near 2.0% to $1,170 at the latest.

The key week begins on a negative note

The week comprising US Q3 GDP, Nonfarm Payrolls and Fed Chair Jerome Powell’s first speech after the dovish meeting, has already put the traders on their toes before the covid woes propelled the risk aversion. Adding to the market’s fears were headlines surrounding more political turmoil surrounding China and Russia.

Global traders recollect the early covid days that led to global hardships and rushed to the US Dollar in search of risk-safety. However, the softer US Treasury yields, mainly due to the Fed policymakers’ readiness to ease the rate hikes, seemed to have tested the greenback bulls.

AUDUSD dropped the most among the G10 currency pair as Aussie Retail Sales marked the first contraction of 2022 while RBA’s Lowe also appeared worried. Further, Gold dropped for the second consecutive day while oil prices refreshed the yearly bottom.

GBPUSD also has additional worries, concerning the likely nationwide strikes of public workers, but managed to fight the bears amid hawkish concerns from the BOE.

Elsewhere, concerns that the US equities are up for more pain and the FTX bankruptcy is the start of the melting pot, seemed to have weighed on the BTCUSD and the ETHUSD prices.

• Strong buy: USDJPY
• Strong sell: ETHUSD
• Buy: USD Index, USDCAD, Nasdaq, EURUSD
• Sell: DAX, FTSE 100, gold, BTCUSD, AUDUSD

Central bankers, COVID-19 in focus for the day

Moving ahead, the aforementioned risk catalysts could direct short-term market moves while multiple speeches from the policymakers of the European Central Bank (ECB) and the Federal Reserve (Fed) could provide additional directives for traders. Above all, anxiety ahead of this week’s top-tier data and events could keep the risk-aversion active unless a positive surprise erupts from either the EU or the US or both, which is less likely.

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