AUD/USD seesaws around mid-0.6600s amid fragile markets, mixed concerns about Fed

• AUD/USD remains sidelined after Aussie data, risk-on mood favor bulls to eye the biggest weekly gains since late January.
• Global policymakers, banks try their hands to placate fears of financial crisis but traders seem less-convinced, despite latest optimism.
• Yields bounce off multi-day low, equities improve but weekly performance suggests market’s indecision.
• Final clues for next week’s FOMC eyed to confirm 25 bps rate hike.

AUD/USD treads water around 0.6650, after the previous day’s upbeat performance, as bulls brace for the biggest weekly gain in seven heading into the next week’s Federal Open Market Committee (FOMC) monetary policy meeting. It should be noted that the upbeat Aussie data and improvement in the market sentiment favored the risk-barometer pair even as the latest moves seem to portray traders’ cautious mood amid a light calendar at home.

Global policymakers and banks rushed to tame the banking industry fallout and favored the market sentiment the previous day. However, the investors aren’t all in and remain cautious as some of the latest market performance resembles the 2008 financial crisis.

That said, comments from Saudi National Bank's Chairman, Ammar Al Khudairy, conveying the “sound” conditions of Credit Suisse join the major US banks’ efforts to help California-based First Republic Bank to avoid a liquidity crunch to favor the risk-on mood. On the same line was the news that Credit Suisse eyes borrowing up to CHF50 billion from the Swiss National Bank (SNB) to strengthen liquidity, as well as Reuters quoting anonymous sources to confirm that the US banks are less vulnerable to the Credit Suisse debacle. Furthermore, US Treasury Secretary Janet Yellen’s assurance over the US banking industry’s health and European Central Bank’s (ECB) 50 bps rate hike, matching expectations, also favored the sentiment and allowed the latest run-up in the AUD/USD prices.

Elsewhere, US Weekly Initial Jobless Claims dropped to 192K for the week ended on March 10 versus 205K expected and 212K prior whereas the four-week average figure dropped to 196.5K versus 197.25K prior (revised). Further, Housing Starts jumped to 1.45M in February from 1.321M previous reading and 1.31M analysts’ estimations while the Housing Starts jumped to 1.524M during the said month versus 1.34M expected and 1.339M prior. Additionally, the Philadelphia Fed Manufacturing Survey gauge came in as -23.2 compared to -14.5 consensus and -24.3 prior.

At home, Australia’s headline Employment Change jumps by 64.6K versus 48.5K expected and 11.5K prior while the Unemployment Rate also dropped to 3.5% from 3.7% previous readings and 3.6% expected. Furthermore, Australia’s Consumer Inflation Expectations eased to 5.0% for March versus 5.4% market forecasts and 5.1% prior.

Amid these plays, United States 10-year and two-year Treasury bond yields are down for the second consecutive week despite the previous day’s rebound from the multi-day low. Further, Wall Street closed in the green with more than 1.0% gains by each of the benchmark indices whereas US Dollar Index (DXY) marked a negative daily closing. It’s worth mentioning that the Fed fund futures recently bolster the case of the US central bank’s 0.25% rate hike in the next week’s monetary policy meeting.

Moving on, the Michigan Consumer Sentiment Index for March and the UoM 5-year Inflation Expectation for clear directions are the final clues for the next week’s Fed meeting.

Technical analysis

A two-week-old symmetrical triangle restricts immediate AUD/USD moves between 0.6700 and 0.6600 at the latest.