AUD/USD: Gravestone Doji at monthly top probe bulls below 0.7300, China PMI eyed

AUD/USD struggles around the monthly top, taking rounds to 0.7250-60 during early Friday morning in Asia.

The Aussie bulls again faced rejection near 0.7275 the previous day, while forming a bearish candlestick chart at the monthly top as mixed sentiment and a light calendar joins thin end-of-year liquidity conditions.

The pair’s latest performance portrayed the market’s inactive status during the final days of 2021, even as the South African covid variant named Omicron continues to hurt the sentiment with a jump in cases.

After witnessing a rally in the daily covid infections at home and abroad, the Australian Prime Minister decided to alter the definition of ‘close contact’ with the infected during the emergency National Cabinet Meeting. “We need to reset how we think about the pandemic, and how we manage ourselves and the things we need to do as governments,” said Aussie PM Morrison.

That said, Australia’s populous state New South Wales (NSW) again reports a jump in the COVID-19 figures while Victoria also prints an all-time high of 5,919 cases and seven virus-linked death per ABC News. “NSW's daily COVID-19 case tally has nearly doubled for the second time in three days, with 21,151 infections and six deaths recorded,” said ABC News.

Elsewhere, Reuters tally for the US coronavirus numbers suggests a record number of newly reported cases, based on the seven-day average, while printing above 290,000 figures for the second consecutive day. “In Europe, where almost one million people have died of coronavirus over the past 12 months, traditional concerts and firework displays that typically draw thousands of people onto the streets were canceled in most major cities, including London, Paris, Zurich, Brussels, Warsaw and Rome,” said Reuters.

Talking about data, the US Initial Jobless Claims eased to 198K versus 208K expected during the week ended on December 24. Further, Chicago Purchasing Managers’ Index rose past 62.0 forecast to 63.1 for December.

While portraying the market mood, the Wall Street benchmarks posted mild losses whereas the US 10-year Treasury yields consolidated the heaviest daily jump in three weeks, posted the previous day.

It’s worth noting that the firmer US data and Omicron fears underpinned the US dollar’s safe-haven demand but cautious optimism of the global policymakers joined the year-end lacklustre moves to restrict the AUD/USD moves.

Given the holiday at home, as well as the light calendar, AUD/USD prices may remain sluggish. However, China’s official PMIs for December will be important to watch. That said, the headline NBS Manufacturing PMI is expected to remain unchanged at 50.1 while Non-Manufacturing PMI may improve to 53.1 versus 52.3, which in turn can help the Aussie pair to overcome the immediate hurdle on firmer readings.

Technical analysis

AUD/USD formed “Gravestone Doji” bearish candlestick near 0.7275 key hurdles comprising monthly rising wedge’s resistance line and 50% Fibonacci retracement (Fibo.) of October-December downside.

Adding to the upside filters is the 100-DMA level of 0.7290 that will act as a validation point for the further rally towards the mid-November swing high of 0.7371.

Alternatively, pullback moves can retest 38.2% Fibo. level surrounding 0.7200 but a three-month-old horizontal area near 0.7175-70 will restrict any further downside.