- AUD/USD defies pullback from 0.7038 with the bounce off 0.6993.
- Vaccine hopes favor risk sentiment, the US dollar fails to cheer upbeat data amid virus woes.
- Sino-American tension, COVID-19 spread in Melbourne caps the upside at monthly high.
- Australia’s June month jobs report, Chinese Q2 GDP and Retail Sales are in the spotlight.
AUD/USD prints another rise past-0.7000 threshold, currently around 0.7007, at the start of Thursday’s Asian session. The quote did refresh monthly high to 0.7038 the previous day but couldn’t stay beyond the round-figure for longer, like recently. Even so, its latest U-turn from 0.6993, coupled with the recent positive price performance, keeps the bulls hopeful ahead of the busy day.
Expectations of a cure to the deadly coronavirus (COVID-19) offered fresh fuel to the market’s optimism the previous day. The mood got extra support from upbeat US data and downbeat performance of the greenback. Though, continued tension between the US and China, with the speedy rise in the pandemic numbers, tame the upbeat sentiment.
Read: Breaking: US will have effective Covid-19 vaccine by year-end – Fauci
Market cheers early signals of COVID-19 cure ahead of busy day…
While adding strength to the early-Tuesday statements from Moderna and US President Donald Trump, Oxford Scientists and US health official Fauci also suggest that the vaccine for the deadly virus will be out soon. This became the market mover the previous day and boosts the risk-tone off-late. Also adding to the optimism could be upbeat data from the US and hopes of further stimulus by the global policymakers.
Oxford scientists believe they could have breakthrough on Covid-19 vaccine – Telegraph
On the contrary, the Sino-American tussle continues to become the market negative factor with both sides indulging in the war of words. US President Donald Trump signed an executive order to shun Hong Kong’s special trading status and threatened additional steps that got the expected response from China. Also, record-high pandemic numbers from the US and fears that virus conditions in Melbourne will worsen further added barriers to the upbeat mood.
Against this backdrop, Wall Street marked another positive day, though with milder gains than Tuesday, whereas the US 10-year Treasury yields also rose further towards 0.70%.
Traders will have a busy Asian session with Aussie employment numbers for June, followed by China’s second-quarter (Q2) GDP in focus. Australian Employment Change is expected to recover from -227.7K prior to 112.5K whereas Unemployment Rate could rise from 7.1% to 7.4%. Further, China’s Q2 GDP bears the market consensus of +2.1% versus -6.8% of previous readouts. Even if the data might immediately offer additional fuel to the pair’s current run-up, anticipated weakness in the coming months at home and likely escalating US-China tension might cap the gains. It should, however, be noted that the vaccine hopes may continue to support the risk-on mood and help the Aussie quote.
Technical analysis
Repeated failures to stay strong past-0.7000 might not be a problem for the bulls aiming to cross June month high near 0.7065. However, the bears can re-enter if AUD/USD prices fall below 0.6920 comprising lows marked since July 07 and 21-day SMA.
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