AUD/USD remains fragile below 0.6600 as US NFP looms
|
- AUD/USD fails to recover from four-month trough, holds lower ground of late.
- Global markets remained vulnerable on mixed US data amid cautious mood ahead of NFP.
- Downbeat China inflation, US President Biden’s budget proposal also strengthens risk-off mood.
- Equities drop but a retreat in yields weigh on US Dollar despite sour sentiment.
AUD/USD justifies its risk-barometer status while revisiting the sub-0.6600 area early Friday, after a failed attempt to recover from the four-month low. In doing so, the Aussie pair traces the downbeat equities and fears emanating from China, as well as failing to cheer the retreat in the US Treasury bond yield and the US Dollar, amid the market’s cautious mood ahead of the all-important US employment data.
Wall Street benchmarks closed with more than 1.5% daily losses each but the US 10-year and two-year Treasury bond yields eased to 3.92% and 4.87% versus 5.08% and 4.01% daily open respectively. It should be noted that the US Dollar Index (DXY) managed to pare some of the daily losses by the end of Thursday but failed to ignore the biggest daily fall in a week.
While tracing the key catalysts mixed employment clues from the US gain major attention. That said, US Initial Jobless Claims marked the biggest jump since January by rising to 211K for the week ended on March 03 versus 195K expected and 190K prior. Additionally, the Challenger Job Cuts were down and the Continuing Jobless Claims were up.
Elsewhere, disappointment from China’s monthly Consumer Price Index (CPI) and Producer Price Index (PPI) data for February also dims the prospects of recovery in the world’s second-largest economy and weighs on the risk profile. On the same line could be the fears of higher taxes in the world’s biggest economy, the US, as well as the political chaos relating to it as US President Joe Biden proposes raising corporation tax from 21% to 28% in his latest budget guide ahead of Friday’s release.
Above all, hawkish comments from Fed Chair Jerome Powell join dovish rhetoric from Reserve Bank of Australia (RBA) Governor Philip Lowe to keep the AUD/USD bears hopeful as traders await the key US Nonfarm Payrolls, expected 205K versus 517K prior.
Given the mixed early clues and the strong prints in the last, fewer odds favor the positive surprise from the US jobs report and hence the AUD/USD pair may witness a corrective bounce. The hopes of recovery also take clues from the quote’s repeated failure to drop below 0.6550.
Also read: Nonfarm Payrolls Preview: Five scenarios for the Fed, USD and stocks reactions, with probabilities
Technical analysis
AUD/USD dribbles inside a 100-pip trading range between 0.6640 and 0.6540 comprising levels marked during late October and November 2022.
Information on these pages contains forward-looking statements that involve risks and uncertainties. Markets and instruments profiled on this page are for informational purposes only and should not in any way come across as a recommendation to buy or sell in these assets. You should do your own thorough research before making any investment decisions. FXStreet does not in any way guarantee that this information is free from mistakes, errors, or material misstatements. It also does not guarantee that this information is of a timely nature. Investing in Open Markets involves a great deal of risk, including the loss of all or a portion of your investment, as well as emotional distress. All risks, losses and costs associated with investing, including total loss of principal, are your responsibility. The views and opinions expressed in this article are those of the authors and do not necessarily reflect the official policy or position of FXStreet nor its advertisers.