AUD/USD extends post-FOMC gains to cross 0.6550, fresh seven-week high, China PMIs eyed

AUD/USD bulls keep the helm while taking the bids to 0.6555, with the recent high of 0.6559, at the start of Thursday’s Asian session. In doing so, the Aussie pair stretches the latest gains to refresh seven-week top while cheering weak US dollar, amid downbeat US catalysts, as well as optimism concerning the coronavirus (COVID-19) drug discovery.

US GDP drops, Fed conveys pandemic fears and stays ready for further action…

The preliminary reading of the US first quarter (Q1) GDP slumped more than expected -4% to -4.8%, the sharpest fall since the Great Financial Crisis (GFC). The growth figures marked +2.1% prior to Q4 2019. Even so, some in the street anticipated higher than the actual loss to the GDP.

The US Federal Reserve (Fed) didn’t step back from conveying that the current health crisis poses considerable risks to the economic outlook over the medium term. The Fed policymakers also showed readiness to do “whatever it takes” with Chairman Jerome Powell matching wide expectations of being worried and conveying the fears. It’s worth mentioning that the Fed didn’t alter its monetary policy amid all, as anticipated, during Wednesday’s meeting.

Gilead’s Remdesivir adds strength to risk-on…

With the market’s keen search for the epidemic’s cure, news that Gilead’s experimental drug Remdesivir cut the time to recover from COVID-19 and showed evidence of blocking the virus propelled the risk-on sentiment. The development helped US President Donald Trump to reiterate his push for the vaccine and be the man to save the world. As per the CNBC, US President Trump wants FDA to move as quickly as they can on Remdesivir coronavirus approval.

As a result, the US 10-year Treasury yields gain two basis points (bps) to 0.63% whereas Wall Street closed Wednesday with over 2.0% gains each by the key benchmarks.

Looking forward, China’s official figures for April month Manufacturing and Non-Manufacturing PMI will be the key to watch ahead of the Aussie Q1 Import and Export Price Index as well as March month Private Sector Credit. The key data, China Manufacturing PMI, is likely to soften from the previous 52 to 51, while further weakness is expected in the Aussie data. However, Chinese figures might surprise to the upside considering the economy’s return from the virus lockdowns, which in turn can please the bulls. It should also be noted that the Aussie CPI for the first quarter (Q1) has been upbeat and hence may help provide welcome surprises to the Aussie data watchers. Other than the calendar, virus updates will also be the key.

Technical analysis

100-day SMA near 0.6570 is still standing tall to challenge the Aussie buyers. Though, sellers will refrain entries unless breaking mid-month high close to 0.6445/40.