AUD/USD falls below 0.6700 on risk aversion

The AUD/USD pair is down over 1.30% this week on risk aversion.
Weaker-than-expected Chinese growth in Q2 and iron ore prices are dragging on the Australian dollar.
Strong Australian jobs data could lead to RBA rate hike; US employment indicators show weakness.

The Australian dollar fell slightly during the North American session, extending its losses by over 0.20% against the US dollar. The AUD/USD pair is set to end the week with losses of over 1.30% and a turnover of 0.6693.

Australian dollar hit by iron ore prices and feeble Chinese data

Risk aversion is the name of the game on Friday as most high-beta currencies feel the pain of traders seeking safety. China’s second-quarter growth data disappointed investors, a headwind for the Australian dollar given its closest links to the world’s second-largest economy.

Meanwhile, commodity prices are weighing on the down under, including the Kiwi. Iron ore is down 1.70%, extending losses from the past two weeks to over 3.70%.

Apart from that, the Greenback continued to recover from the lows last seen on March 21st around 103.60. The US Dollar Index (DXY) is up 0.11% at the time of writing, up to 104.29 as it tests the key 200-day moving average (DMA). Further upside is in sight if this level is breached.

Macroeconomically, Australia’s latest employment data was solid and could prompt the Reserve Bank of Australia (RBA) to raise rates in August. On the US front, employment data continued to show signs of “weakness”, although Fed policymakers stopped miniature of suggesting a timeline for possible rate cuts, adding that they needed more certainty before easing policy.

Later in the day, investors will listen closely to speeches by John Williams, president of the US Federal Reserve in New York, and Raphael Bostic from Atlanta.

AUD/USD Price Analysis: Technical Outlook

After falling below the 0.6700 level, AUD/USD is expected to challenge the 50-DMA at 0.6668 with further weakness as negative momentum builds. Sellers are in charge, according to the Relative Strength Index (RSI) which fell below the neutral 50 line, opening the door for further declines.

As traders pull prices below 0.6668, the next notable support levels will be the June 28 low at 0.6619 and the 100-DMA at 0.6604. Key resistance is found at 0.6700 and then the July 18 high at 0.6743.