• AUDUSD prints mild losses around six-week high, snaps three-day uptrend.
• Fears of US government gridlock, pessimism surrounding China’s covid conditions and softer inflation data weigh on prices.
• Risk appetite remains sluggish ahead of the key data/events, bears are likely to retake control.

AUDUSD aptly justifies its risk-barometer status as it prints the first daily loss, so far, in four days amid political and/or covid updates. That said, the Aussie pair remains depressed around 0.6490, mildly offered heading into Wednesday’s European session.

A tug-of-war between the Republicans and Democrats has so far failed to provide any meaningful signals for the mid-term elections. Even so, fears of a government gridlock keep the sentiment sour of late.

Also weighing on the market’s risk appetite are the fresh virus-led lockdowns in China and the multi-month high covid numbers. Recently, China reports the highest levels of new COVID cases in six months, with the latest addition of 8,335 for November 08, while marking a fresh virus-led lockdown in Guangzhou’s second district.

Elsewhere, fresh pick-up of the US Treasury yields and the latest fall in the S&P 500 Futures, after hearing the fresh victory of John Fetterman, a Democrat, of the race for Senate in Pennsylvania.

It should be noted that the downbeat China inflation figures for October teased bears earlier in Asia.

To sum up, the risk-off mood and a light calendar ahead of Thursday’s Consumer Price Index (CPI) keep AUDUSD bears hopeful.

Technical analysis

AUDUSD retreats from a convergence of the 50-DMA and a five-week-old resistance line, around 0.6510, which in turn joins the recently bearish MACD signal to tease bears targeting the 21-DMA support near 0.6370.