AUD/USD: Aussie/China data probe bulls around 0.7400, US NFP in focus
|- AUD/USD remains sidelined around monthly top even as latest data came in downbeat.
- Australia Retail Sales confirm 2.7% contraction in July, China Caixin Services PMI
- Aussie covid infections refresh record top, death counts jump to a yearly high.
- Pre-NFP caution restricts market mood but USD weakness keeps bulls hopeful.
AUD/USD pays a little heed to domestic Retail Sales and China Caixin Services PMI during the general pre-NFP trading lull on Friday. That said, the quote seesaws around a one-month high near 0.7410 at the latest.
Australia’s Retail Sales for July confirmed the preliminary reading of -2.7% MoM whereas China Caixin Services PMI dropped to 46.7 versus 52.6 expected and 54.9 prior. This dragged the Caixin Composite PMI to 47.2 versus 53.1 prior. It’s worth observing that China data dropped to the lowest since published in May 2020.
As stated earlier, the pair’s inaction can be linked to the sluggish mood. Market sentiment repeats the pre-NFP lull and adds to the AUD/USD pair’s boring performance. In doing so, the traders struggle to justify the record daily infections in Australia as well as a yearly high virus-led death level for Thursday, near 1,640 and 12 in that order. Elsewhere, China reports zero new local cases whereas the UK refreshes multiday high infections and death tolls while pushing for booster jabs when rolling out in early September.
The reason for the cautious optimism could be linked to the recently downbeat prints of the second-tier US jobs data as well as receding hospitalizations.
The Initial Jobless Claims and Continuing Claims eased from the market consensus for the week ended on August 27 Thursday. The four-week average of Initial Jobless Claims also declined from 366.75K to 355K. Previously, the ADP Employment Change and the employment component of the US ISM Manufacturing PMI both signaled a contraction in the US jobs and marked the need for further easy money policies.
Amid these plays, S&P 500 Futures remain sluggish even as the Wall Street benchmarks closed mildly positive on Thursday whereas the US 10-year Treasury yields drop 0.4 basis points (bps) to 1.29% by the press time.
Moving on, the cautious sentiment may keep pushing the traders to ignore any major data ahead of the US Nonfarm Payrolls (NFP). However, covid headlines may entertain AUD/USD traders.
Read: US August Nonfarm Payrolls Preview: Analyzing major pairs' reaction to NFP surprises
Technical analysis
A clear break of the yearly horizontal hurdle surrounding 0.7410-15 becomes necessary for the AUD/USD bulls to keep reins. Otherwise, a pullback towards the 10-week-old falling trend line and 50-DMA, respectively around 0.7290 and 0.7375, can’t be ruled out.
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