AUD/USD approaches 0.7500 to renew 2022 peak amid mixed concerns over Ukraine, strong yields
|- AUD/USD led G10 currency pair gainers by refreshing yearly top, trading sidelined of late.
- Softer greenback, firmer stocks favored bulls, three-year high US Treasury yields fail to propel USD, nor stop equity bulls.
- Ukraine showed signs of compromise, Russia paid a second bond coupon but the war continued.
- RBA’s Lowe again pushed back rate-hike expectations but Fedspeak has been hawkish.
AUD/USD bulls cheered firmer equities and softer greenback to refresh 2022 high around 0.7075 during early Wednesday morning in Asia.
The risk barometer pair renewed its four-month top the previous day despite strong US Treasury yields and mixed sentiment over Ukraine and Russia. In doing so, the Aussie pair became the biggest daily gainers in the G10 currency pairs despite indecision over the market’s risk profile.
The US 10-year and 2-year Treasury yields rose to the highest since May 2019 as the Fedspeak keeps inflating expectations of faster rate hikes from the US central bank. Among them, St Louis Fed President, James Bullard and Cleveland Fed President Loretta Mester clearly showed signals of 50 basis points (bps) of a rate lift.
On the other hand, Reserve Bank of Australia (RBA) Governor Philip Lowe reiterated his dislike for aggression towards rate hikes by saying, “(RBA) will not respond until there is evidence of pervasive price pressures.”
Elsewhere, Ukraine’s President Volodymyr Zelenskyy who previously eased on his stand to faster the peace talks recently said, “Talks with Russia are difficult, at times confrontational.” On the other hand, war escalates in Mariupol. It’s worth observing that Moscow managed to pay the second tranche of Eurobond coupon payment in the USD and avoided default for the second consecutive time.
Apart from the aforementioned play surging covid numbers in China and Europe, with the new variant gaining attention in the bloc, also challenges the market sentiment, but was mostly ignored.
Amid these plays, Wall Street benchmarks regained their mojo and the stock futures are up too.
Moving on, a light calendar in Asia may put AUD/USD at the mercy of risk catalysts while comments from Fed Chair Powell and second-tier US economics may entertain the pair traders afterward.
Technical analysis
Although successful trading above the 200-DMA level of 0.7300 keeps AUD/USD buyers hopeful, a 10-week-old ascending resistance line, near 0.7485 challenges the quote’s further upside.
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