• AUD/USD drops in tandem with S&P 500 futures, as risk sentiment sours.
• Omicron covid woes escalate, China’s Caixin Services PMI disappoint.
• Focus shifts to US NFP, as the aussie shrugs off early RBA rate hike calls.

AUD/USD is consolidating at yearly lows near 0.7070, heavily weighed down by the prevailing risk-on market profile.

The market sentiment soured in Asia this Friday after investors reacted negatively to the news of the new Omicron covid variant spreading in the US, with new cases reported in Hawaii, New York and Los Angeles. Reflecting risk-off mood, the S&P 500 futures drop 0.20% so far.

Further, renewed US-China tussle, as Didi Global Inc. prepares delisting from the US bourses, added to the damp mood while exacerbating the pain in the higher-yielding aussie.

The aussie bears also cheered the drop in the Chinese Caixin Services PMI, with the index arriving at 52.1 in November vs. 53.8 previous.

Collaborating with the downside in the spot, the US-Sino trade woes are back in play, especially after China’s ambassador to the US called for the abolition of tariffs on Chinese goods.

Attention now turns towards the US Nonfarm Payrolls release, which could further strengthen the Fed’s hawkish view. Meanwhile, the aussie appears to ignore the earlier calls for an RBA rate hike, as investors remain unnerved.

AUD/USD: Technical levels

“The 4-hour chart also hints at further declines, as the pair remained below bearish moving averages, while technical indicators hold within negative levels with uneven strength. Support levels: 0.7060 0.7015 0.6970. Resistance levels: 0.7140 0.7175 0.7210,” FXStreet’s Chief Analyst Valeria Bednarik notes.

AUD/USD: Additional levels to consider