AUD/USD awaits fresh clues amid consolidation near multi-month high above 0.7100

AUD/USD drops to 0.7140 at the start of Thursday’s Asian session. In doing so, the aussie pair retraces from 0.7183, the highest since late-April 2019, before bouncing off 0.7130 while also keeping the latest upside cap around 0.7155/56. The quote flashed the four-day winning streak by the end of Wednesday. However, the day’s gains seemed to be the least since in the latest run-up, which in turn signals that the bulls are exhausted.

Although broad US dollar weakness and market’s optimism surrounding further aid packages and the cure to the coronavirus (COVID-19) keeps the pair positive, fresh tension between Beijing and Washington tames the gains. Also on the negative side could be mixed Aussie data flashed the previous day and uncertainty among the American policymakers over the upcoming fiscal package.

Sino-American stories are back to haunt the bulls…

The governments of the world’s two largest economies threatened each other on Wednesday to close respective consulate offices in Wuhan and Houston, which in turn rekindled the risk-off moves. The Trump administration cited intellectual property rights and private information to give a 72 hours deadline to the dragon nation to close one of its five consulate offices that the other party retaliated without hesitation. Also weighing on the risk-tone could be the US President Donald Trump’s announcement of sending troops to Chicago amid violent crime.

Additionally, US Treasury Secretary Steve Mnuchin’s initial signal that the policymakers will be able to announce aid package by the end of July dimmed after the government cited the need for intermediate extension of the unemployment insurance benefits. Other than the actual size of the much-awaited stimulus package, which Democrats propose $3.5 trillion in contrast to the Republicans’ bid of 1.0 trillion, the amount of the insurance policy, currently $600 per week, is also up for debate.

Even so, Wall Street closed the day with mild gains amid expectations of further stimulus while the US 10-year Treasury yields weakened to 0.60%. Further, Gold refreshed the highest since late-2012 whereas the US dollar index (DXY) remained on the back foot near March bottom.

Moving on, the pair traders will keep eyes on Australian Treasurer Josh Frydenberg’s announcement of the Federal Budget and update on the economic policies to tame the pandemic. Also up in the radar is the National Australia Bank’s (NAB) second quarter (Q2) readings of Business Confidence, expected -8 versus -11 prior.

Technical analysis

Unless breaking below June 2020 top surrounding 0.7065, AUD/USD prices are less likely to revisit the 0.7000 threshold. On the contrary, odds of its attack to 0.7200 round-figures, near highs marked in late-February and April of 2019, keeps increasing.