- AUD/USD trims the previous day’s losses while keeping bounce off 0.7722.
- US dollar keeps gaining, this time with upbeat data at home, Wall Street also recovered some losses after FOMC minutes.
- Aussie data, RBA’s Kent couldn’t save the bulls as US Treasury yields refreshed multi-month high before easing, favoring greenback earlier.
- China’s return after the New Year holidays also becomes the key.
AUD/USD consolidates recent losses to 0.7755, following the two-day downtrend, during the early Thursday morning in Asia. US dollar gains have recently been weighing on the aussie pair but China’s resumption of trading after a long break and Australian jobs report for January keeps the buyers hopeful ahead of the data/events.
Yields ease, equities recover but the King Dollar keeps the rein…
Having started Wednesday’s trading around the highest since February 2020, US Treasury yields eased to close the day with 10-year coupon declining 1.4 basis points (bps) to 1.285%. Wall Street benchmark also stayed mixed at the end of the week’s third trading day despite recovering some of the initial losses after the FOMC minutes rekindled the need for asset purchases to continue. However, the one thing that remains strong as a rock, also mattered the most, is the US dollar index (DXY) that marked the second day of gains to refresh the one-week top.
Other than the mixed equities and yields, the greenback’s gains could be attributed to the upbeat Retail Sales, Industrial Production and Producers Price Index (PI) data at home. Also favoring the mood could be the chatters that the US policymakers are near to the much-awaited $1.9 trillion covid relief stimulus. Also on the positive side could be American President Joe Biden’s optimism to have all the Americans vaccinated by July.
At Australia, upbeat Westpac Leading Index and RBA Assistant Governor Christopher Kent’s justification of QE stretch couldn’t recall the AUD buyers as greenback strength weighed on Antipodeans and commodities.
Moving on, Australia’s January jobs report will be the key and so does China’s return from Lunar New Year break. While forecasts suggesting the Employment Change and Unemployment Rate flash mixed signals, versus RBA’s employment fears, positive surprise needs validation from Chinese players’ risk assessment on return to renew the AUD/USD upside momentum.
Read: Australian Employment Preview: Solid jobs report to revive AUD/USD’s bullish momentum
Technical analysis
An initial double top formation around 0.7806 directs AUD/USD towards the 21-day SMA and an ascending support line from November 02, respectively around 0.7700 and 0.7650, before confirming the bearish pattern by breaking the 0.7560 key support. Meanwhile, the yearly top near 0.7820 adds to the upside filter.
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