AUD/USD: Corrective pullback fades around mid 0.7300s on mixed clues

AUD/USD remains sidelined around 0.7350 after snapping a two-day downtrend amid early Wednesday morning in Asia. The Aussie pair bounced the off yearly low the previous day as the US Senate passed President Joe Biden’s $1.2 trillion infrastructure spending plan. However, virus concerns and firmer Treasury yields weigh on the quote, not to forget cautious mood ahead of the US Consumer Price Index (CPI) for July.

US Republicans-backed stimulus finally made it through the Senate and buoyed market sentiment on Tuesday. The bill got a 69-30 vote count to head towards the House before reaching President Biden for a sign. It should be noted, however, that the budget concerns do hover on the lawmakers’ heads as the present debt limit restrictions expired at the start of August. This will be a tough challenge for the American politicians to agree amid a widening budget deficit.

The stimulus news favored equities but technology stocks had to post a dull closing for Tuesday amid firmer Treasury yields. The US 10-year Treasury yields rose for the five consecutive days at the latest, up 3.7 basis points (bps) to 1.354%, as optimism concerning the US economy, backed by the stimulus and upbeat jobs report, joined Fed’s tapering concerns. Also contributing to the US bond coupon could be the market’s rush to risk-safety amid the latest Delta covid variant spread and weakness in gold prices.

COVID-19 infections from the US and Australia keep increasing of late and the virus resistance of the strain worries the policymakers to lose the economic recovery momentum. Although the headline economics is yet to portray the pessimism, sentiment data from National Australia Bank (NAB) and the US NFIB challenged the bulls.

Moving on, Australia’s Westpac Consumer Confidence for August, prior 1.5%, may entertain intraday AUD/USD traders ahead of the US CPI for July, expected to ease from 0.9% MoM to 0.5%. While soft inflation data may cool down the reflation fears and can help the Aussie pair, early indicators to signal a firmer outcome, which backed by upcoming stimulus, will inflate the hopes of the Fed’s policy adjustments and favor the US dollar to challenge the bulls.

Read: US July CPI Preview: Inflation data unlikely to change Fed tapering expectations

Technical analysis

AUD/USD remains vulnerable to refresh yearly low below 0.7288 unless crossing the 0.7410-15 horizontal area comprising multiple levels marked since early July. Even so, a monthly flat-line around 0.7320-15 can offer an intermediate halt during the anticipated fall.