AUD/USD defends 0.7200 despite downbeat Aussie data, Fed Chair Powell eyed

AUD/USD picks up bids to 0.7235, trimming intraday losses to 0.10%, even as Aussie Retail Sales for July came in worse than expected during early Friday. The reason could be linked to the consolidation moves amid a quiet session ahead of the key events.

Australia Retail Sales for July was revised down from -1.8% initial forecast to -2.8%, versus -2.3% expected second estimation figure.

Read: Aussie Retail Sales: July MoM -2.7% vs the est -2.5%, prev -1.8%

The latest Fedspeak has been hawkish and weighed on the risk appetite the previous day, joined by the geopolitical jitters concerning Afghanistan and China to weigh on the AUD/USD prices. However, a light calendar in Asia and cautious mood ahead of Fed Chair Jerome Powell’s Jackson Hole Symposium speech restrict the pair’s moves of late.

Among the Fed hawks was Dallas Fed President Robert Kaplan who said, “Fed's asset purchases had their purpose and their time but not longer well-suited to the situation.” James Bullard and Ester George were the rest of the non-voting Fed members who followed Kaplan and firmed up concerns over tapering.

Blast at Kabul airport and reports of two or three US officials being hurt raised worries of the US response to the Taliban. In response to the same, US President Joe Biden held militant group ISIS responsible for the attack and showed readiness to respond.

Elsewhere, the South China Morning Post (SCMP) said, “Critics accuse Washington of doing little to help Australia in its China conflict, as American exporters cash in on increased demand amid supply shortages.” Another catalyst from Beijing challenging the risk appetite and AUD/USD prices is the fear of worsening economic conditions at Australia’s largest customer and readiness to crack down on online fan culture.

Alternatively, news that the Aussie covid cases eased from the record top of 1,130 to 964 and comments from the covid technical advisory group, recommending vaccinations for 12 years and above, battled the bears.

Amid these plays, S&P 500 Futures print mild losses, tracking the Wall Street benchmarks, whereas the US 10-year Treasury yields remain pressured around 1.34% at the latest. Furthermore, the US Dollar Index (DXY) also struggles to extend Thursday’s recovery moves.

Looking forward, the US Core PCE Price Index for July will join the risk catalysts to entertain AUD/USD traders but major attention will be on how Powell defends the Fed’s easy money policies.

Read: Fed Chair Powell’s Jackson Hole Speech: Caution will win out

Technical analysis

AUD/USD losses on Thursday pulled the quote back below the key resistance confluence comprising 100-SMA and a downward sloping trend line from July 06. The fall also took clues from the RSI line’s retreat from the overbought area. Hence, the latest corrective pullback remains meaningless until crossing the stated key hurdle around 0.7300.

Read: AUD/USD Price Analysis: Bulls need 0.7300 breakout for re-entry