Asian stocks are trading lower on Wednesday rally as investors turn cautious after a rising number of coronavirus infections. In many U.S. states, the new coronavirus cases hit record highs, while in Beijing reported over 100 new cases. Geopolitical risks are rising after yesterday 20 Indian soldiers killed in clashes with Chinese soldiers in the Himalayas.
Jerome Powell in a testimony ahead of the banking committee warned on uncertainty about the strength and duration of the U.S. recovery, but he reiterated that the central bank would use all tools available to support the economy during the coronavirus crisis.
Wall Street ended higher yesterday boosted by better than expected U.S. retail sales. U.S. Retail Sales increased by 17.7% in May to $485.5 billion topping the forecasts for an 8% rise, the Retail Sales excluding Autos came in at 12.4%, also above the expectations of 5.5%. Speculation that Trump administration planning a $1 trillion reconstruction package also supported equities.
In Asia, Nikkei is 0.56% lower at 22,455 after Japanese exports fell 28.3% marking the biggest decline since the 2008 GFC. Yesterday the Bank of Japan kept Interest Rate unchanged at -0.1%. The Hang Seng Index is 0.15 higher at 24,420. The Shanghai Composite index is 0.07% lower at 2,929, while the Singapore Straits Times index is 0.43% higher at 2,677.
AUDUSD traded higher in a muted mode as the pair consolidates after the correction from yearly highs. As the trade tensions between Australia and China rises, an Australian Senator called the government to impose tariffs on some Chinese imports. The Leading Indicator increased to 0.2% in May from previous -1.5%, but still below the pre-coronavirus levels. The New Home Sales fell to -4.2% in April from -1.1%.
On the upside, initial resistance for AUDUSD pair stands at 0.6914 the daily top. Next resistance will be met at 0.6971 the high from yesterday’s trading session. The next supply zone is at 0.7002 the high from June 11.
On the contrary, the first support for AUDUSD stands at 0.6852 the daily low. Below 0.6852 the next target will be at 0.6785 the low from June 15 trading session. Next support zone would emerge at 0.6665 the 200-day moving average.