AUD/USD advances towards 0.7300 as market sentiment improves, US data eyed

• AUD/USD takes the bids to refresh intraday high after a three-week downtrend.
• US stimulus chatters, geopolitical headlines battle Fed tapering concerns.
• China’s Evergrande, fears over US debt ceiling and covid headlines challenge the bulls.
• US Durable Goods Orders will decorate calendar but risk catalysts are the key to follow.

AUD/USD consolidates three-week losses, taking the bids to renew intraday high with 0.7276 during Monday’s Asian session.

The Aussie pair seems to cheer the recently positive market sentiment, up 0.15% intraday, while ignoring the previous challenges concerning the Fed tapering and China’s Evergrande. The reason for the latest optimism could be linked to the US stimulus hopes and expectations of economic recovery.

Although US House Speaker Nancy Pelosi steps back from her initial hints of Monday voting on the US infrastructure spending bill, her preference for Thursday and optimism towards passage seems to underpin the market’s risk-on mood. Additionally, the hopes that the US Democrats will use diplomatic power to rule out Republicans if they stick to their demands over the debt limit as it expires on October 01 also favor the market optimism.

Elsewhere, chatters that Japan will remove all virus-led emergencies this week and recently steady covid counts from Australia also favor the AUD/USD bulls. It’s worth noting that Aussie Prime Minister Scott Morrison signaled during the weekend, per ABC News, that the virus-led border restrictions among the states won’t be eased unless the nation hits 80% double-vaccination targets.

Reuters new stating, "Australia's New South Wales (NSW) government plans to unveil its roadmap on Monday for reopening the state from COVID-19 shutdowns, detailing the differing levels of freedoms to be afforded to citizens based on their vaccination status," adds to the market's optimsim and favors AUD/USD buyers. On the same line were the latest comments from NSW Premier Gladys Berejiklian who sees October 11 as start of easing lockdown restrictions while the final stage of reopening scheduled for December 01.

On a distant note, news that China and Canada did a prisoner swap during the weekend, resulting in the release of Meng Wanzhou, daughter of Huawei's founder and the CFO of the company, also favor the market sentiment.

Alternatively, the US central bank officials, namely Cleveland Fed President Loretta Mester and Kansas City Fed President Esther George, back the tapering decision of the Federal Reserve (Fed) in their latest appearances. Fed Chair Jerome Powell spoke for supply chain issues and labor market shortages on the other hand.  Furthermore, China’s Evergrande is a problem for the Dragon nation despite the government and People’s Bank of China (PBOC) trying to safeguard the monetary policy. Fears emanating from the real-estate giant have recently started hurting the power sector and hints at a major challenge for Beijing.

Against this backdrop, US 10-year Treasury yields ease from a three-month high near 1.458% while the S&P 500 Future rise 0.30% by the press time.

Moving on, US Durable Goods Orders for August, expected +0.6% versus -0.1% prior, may entertain AUD/USD traders but the risk catalysts will be the key to follow for fresh impulse.

Read: US Durable Goods Orders August Preview: Retail Sales have led the way

Technical analysis

Despite stepping back from 10-DMA immediate hurdle around 0.7280 on Friday, the AUD/USD prices remain above the previous resistance line from September 03 near 0.7220, which in turn keeps buyers hopeful.