FX traders should be mindful that Australia's open and export-heavy economy is vulnerable to trade tensions, meaning AUD/USD could be harmed in May which typically is a month that sees this currency pair struggle.
China "indefinitely" suspended on Thursday all activity under a China-Australia Strategic Economic Dialogue, its state economic planner said, the latest setback for strained relations between the two countries nL1N2MT048.
Historically, AUD/USD tends to fall in May.
A seasonality study of AUD/USD's performance for each May since 2000 shows it has dropped in 14 of the past 21 years, or 67% of the time.
AUD/USD seasonality should not be considered in isolation, but it becomes more useful when combined the news of the trade tensions with China and subtle medium-term technical signs.
AUD/USD developed long upper shadows on the last two weekly candlesticks, signs of a possible rejection of the upside.
A sustained AUD/USD drop through the May 0.7675 low, would weaken the market structure further and increase the likelihood that it finishes May in negative territory.
For more click on FXBUZ