AUD/USD: Downside potential below 0.70 towards the 61.8% retracement of the move up from January 2019

• AUD/USD has been in a chop at the open between a narrow range of 0.7030/43.handle in the London morning, rallying into the North American close up to 0.7040/50 on the nonfarm payrolls disappointment. 
• The downside remains compelling following last week's test of the 0.70

AUD/USD has been one of those major pairs that have been decisively bearish of late following a number of economic data releases from Australia that have confirmed the neutral-dovish bias at the RBA. At the same time, no breakthrough between US/China trade talks and poor economic data from China has been the nail in the coffin. 

"China’s February trade figures surprised the market on the downside by a large margin, casting doubts on the health of the economy at this junction. We might need to wait for a while yet before seeing the impact of the stimulus. As such, gloominess still clouds both the global and China’s economic outlook for now," analysts at Commerzbank noted. 

Global growth fears are one to watch and Brexit is bound to set off some risk of fireworks this week as well - Various news reports suggest Prime Minister May could lose by more than she did in January, setting the stage for a no-deal exit.  We had Fed Chair Powell acknowledging downside risks to the US economy in a speech given after markets had closed on Friday. He too has cited global disinflationary pressures.

However, there was a pause to the downside on Friday following the US job creation came to a grinding halt in February. The payrolls were a big miss on the headline and were only growing a mere +20k versus expectations at 180k. to note, Powell added there was nothing in the outlook requiring an immediate policy response and as analysts at Westpac pointed out, "The details," in the nonfarm payrolls data," are healthier, including a fall in the unemployment rate to 3.8% from 4% and continued firming in average hourly earnings, up 0.4% in the month, taking the annual pace to a new cycle high 3.4%. The weaker jobs print may include some noise from the earlier partial government shutdown, inclement weather, and payback for recent outsized gains (payrolls grew 311k in Jan and 227k in Dec)," analysts at Westpac explained. "

What does Dr.Copper say?

When trading the Aussie, metal prices are key, recently hit by the weak economic data out of China.

"This was despite the commodity import data showing signs of strong demand for commodities. While primary copper imports were weak in January-February, this was more than offset by strong imports of copper concentrate (+24.9% y/y, Jan-Feb)," analysts at ANZ Bank explained. "Overall we calculate total copper units (primary copper plus copper in concentrate) imported into China in January-February was up 12.4% y/y. This suggests firmer underlying demand." - Thus, an argument for a clean bill of health for the globe and supportive to the Aussie. 

AUD/USD levels

"Currently our Elliott wave counts are negative and we look for further weakness to .6950, this is the 61.8% retracement of the move up from January 2019," analysts at Commerzbank argued:

"There is scope for the .6857/78.6% retracement. Rallies will find initial resistance at 0.7125 (55 day ma) and 0.7207 (end of February high) and are likely to remain capped by the 0.7240 200 day ma. Price action in January was exhaustive – the market charted a hammer (reversal). This suggests the down move ended at 0.6738."