AUD/USD stays directed to 0.7400 on softer USD, cautious optimism

• AUD/USD edges higher around multi-day top as 50-DMA, key horizontal hurdle challenge bulls.
• Fears of softer US jobs report recede tapering tantrums, EUR strength adds to the greenback’s fall.
• Aussie GDP, covid data also tried to please bulls.
• Australia Trade Balance, US jobs related data to decorate calendar.

AUD/USD bulls take a breather around 0.7360–65 during early Thursday morning in Asia, after refreshing a three-week top on downbeat USD and risk-on mood the previous day. The Aussie pair traders currently await Australia trade numbers for July, up for publishing around 01:30 GMT, as buyers attack 50-DMA.

The risk barometer pair jumped the most in the current week on Wednesday as early signals for Friday’s US employment data hints at disappointment, which in turn tame the Fed’s tapering chatters. That said, the ADP Employment Change for August rose 374K versus expectations of a 613K rise. Also challenging the jobs scenario was the employment component of the ISM Manufacturing PMI that slumped to the contraction region with the 49.0 figures against 52.9 prior.

On the other hand, Australia’s AiG Performance of Manufacturing PMI came in at 51.6 in August, indicating expansion despite the ongoing lockdowns in the country. The Commonwealth Bank Manufacturing PMI rose past expectations of 51.7 to 52 whereas the Q2 Gross Domestic Product (GDP) resulted at 0.7% QoQ and 9.6% YoY, beat market expectations. It should be noted that China’s Caixin Manufacturing PMI slumped to the contraction region with 49.2 figures versus 50.2 expected and 50.3 prior.

Elsewhere, Australia’s second-most populous state Victoria marked record infections the previous day but couldn’t push the national count towards refreshing the all-time high of 1,380. The reason could be linked to the softening of data from the largest state New South Wales.

The virus numbers are again on the spike and pose challenges to the market sentiment. Recently, the World Health Organization (WHO) is said to observe another variant of the COVID-19, namely Mu, which resists vaccine.

Other than the stated data and virus updates, escalating odds of the European Central Bank (ECB) tapering, recently propelled by Bundesbank President Jens Weidmann, also weigh on the US dollar. That said, the US Dollar Index (DXY) dropped to the fresh low since August 06 the previous day.

Amid these plays, the Wall Street benchmarks closed mixed, after a downbeat day, whereas the US 10-year Treasury yields eased 0.3 basis points (bps) to 1.299% by the end of Wednesday’s North American session.

While risk-on mood and more proofs of US jobs weakness can help the AUD/USD to refresh multi-day tops, today’s Australian Trade Balance for July, expected 10200M versus 10496M prior, will act as a nearby important catalyst. Following that, second-tier US employment data like Nonfarm Productivity for Q2 and weekly jobless claims will be crucial to follow. Above all, this week’s US Nonfarm Payrolls (NFP) and covid updates keep the driver’s seat.

Read: USD: ADP raises red flag for Nonfarm Payrolls

Technical analysis

A clear upside break of a 10-week-old falling trend line and bullish MACD signals back AUD/USD buyers to battle 50-DMA around 0.7385. Also challenging the bulls is a year-old horizontal resistance, 0.7410-15.