- AUD/USD remains strong despite pullback from 0.7716, flirts with the 0.7700 thresholds off-late.
- US dollar weakness, risk-on mood favored bulls amid light calendar.
- US stimulus, vaccine optimism propelled reflation trades, US Treasury yields.
- Australia’s NAB Business Confidence, Conditions for January can entertain traders but risk catalysts remain as the key.
AUD/USD wavers around 0.7700 during the early Asian session on Tuesday. The aussie pair rose for the second consecutive day while rising to the fresh two-week top amid risk-on mood as well as the US dollar weakness on Monday. Although US President Joe Biden’s $1.9 trillion covid relief package is helping the risks, chatters surrounding reflation and the US treasury yields favoring the quote also gained momentum off-late.
No major data but the mood is high…
Despite sparse economic details to start the week, AUD/USD managed to entertain the traders as the US dollar index (DXY) extended its pullback from a two-month high while risks remained elevated on stimulus and virus vaccine hopes.
In the latest update, US House Republican leader Mitch McConnel said that the Democrats have decided to go at virus relief alone. Earlier, the Senate has passed the much-awaited aid package proposal to give it back to Congress for further details. While highlighting the need for the stimulus, US Treasury Secretary Janet Yellen and the majority of Fed members don’t hesitate to take a higher number to witness recovery in 2021.
Also on the positive side were the globally receding coronavirus (COVID-19) cases, except finding the second infection in Melbourne, as well as covid vaccinations. Additionally, news that the Australian Ambassador to the US urged America to reconsider transatlantic partnership also favors risks.
It’s worth mentioning that the latest efforts from the global policymakers to pump the economy seem to have renewed the reflation risks. The same could be witnessed in the latest demand of the US treasury yields whereas the 10-year note marked a jump to a fresh high since March 2020.
Elsewhere, China’s arrest of Aussie tv anchor and the US-Iran tension is on the table but gained a little acceptance from the market players.
Against this backdrop, Wall Street gained around 1.0% by the end of Monday’s trading.
Looking forward, National Australia Bank’s (NAB) Business Confidence and Business Conditions figures for January, expected 8 and 11 versus 4 and 14 respectively, can offer immediate direction to AUD/USD. However, major attention will be given to the qualitative factor concerning the risks.
Technical analysis
A clear break of 0.7645/40 resistance, now support, as well as 21-day SMA, favor AUD/USD bulls to attack a downward sloping trend line from January 14, currently around 0.7730.
Information on these pages contains forward-looking statements that involve risks and uncertainties. Markets and instruments profiled on this page are for informational purposes only and should not in any way come across as a recommendation to buy or sell in these assets. You should do your own thorough research before making any investment decisions. FXStreet does not in any way guarantee that this information is free from mistakes, errors, or material misstatements. It also does not guarantee that this information is of a timely nature. Investing in Open Markets involves a great deal of risk, including the loss of all or a portion of your investment, as well as emotional distress. All risks, losses and costs associated with investing, including total loss of principal, are your responsibility. The views and opinions expressed in this article are those of the authors and do not necessarily reflect the official policy or position of FXStreet nor its advertisers. The author will not be held responsible for information that is found at the end of links posted on this page.
If not otherwise explicitly mentioned in the body of the article, at the time of writing, the author has no position in any stock mentioned in this article and no business relationship with any company mentioned. The author has not received compensation for writing this article, other than from FXStreet.
FXStreet and the author do not provide personalized recommendations. The author makes no representations as to the accuracy, completeness, or suitability of this information. FXStreet and the author will not be liable for any errors, omissions or any losses, injuries or damages arising from this information and its display or use. Errors and omissions excepted.
The author and FXStreet are not registered investment advisors and nothing in this article is intended to be investment advice.
Recommended content
Editors’ Picks
EUR/USD edges lower toward 1.0700 post-US PCE
EUR/USD stays under modest bearish pressure but manages to hold above 1.0700 in the American session on Friday. The US Dollar (USD) gathers strength against its rivals after the stronger-than-forecast PCE inflation data, not allowing the pair to gain traction.
GBP/USD retreats to 1.2500 on renewed USD strength
GBP/USD lost its traction and turned negative on the day near 1.2500. Following the stronger-than-expected PCE inflation readings from the US, the USD stays resilient and makes it difficult for the pair to gather recovery momentum.
Gold struggles to hold above $2,350 following US inflation
Gold turned south and declined toward $2,340, erasing a large portion of its daily gains, as the USD benefited from PCE inflation data. The benchmark 10-year US yield, however, stays in negative territory and helps XAU/USD limit its losses.
Bitcoin Weekly Forecast: BTC’s next breakout could propel it to $80,000 Premium
Bitcoin’s recent price consolidation could be nearing its end as technical indicators and on-chain metrics suggest a potential upward breakout. However, this move would not be straightforward and could punish impatient investors.
Week ahead – Hawkish risk as Fed and NFP on tap, Eurozone data eyed too
Fed meets on Wednesday as US inflation stays elevated. Will Friday’s jobs report bring relief or more angst for the markets? Eurozone flash GDP and CPI numbers in focus for the Euro.