AUD/USD looks to 0.7300 amid risk-on mood, US debt ceiling extension vote eyed
- AUD/USD holds onto recovery moves from weekly low, pokes intraday top of late.
- Optimism over US debt filibuster, Sino-American relations favor buyers.
- Strong US ADP data, uncertainty over US stimulus and Fed tapering concerns trouble traders.
- Risk catalysts will be the key ahead of Friday’s US NFP.
AUD/USD takes the bids to challenge intraday high to 0.7286, up 0.13% on a day during Thursday’s Asian session.
In doing so, the Aussie pair justifies its risk barometer status amid positive headlines concerning the US debt limit and the Sino-American ties. However, firmer Treasury yields probe the bulls ahead of voting on the short-term extension of the US debt ceiling on Thursday, not to forget the key US Nonfarm Payrolls (NFP) up for publishing tomorrow.
After fueling the market sentiment by supporting the US debt ceiling extension, even for a short-term, US Senate Republican Leader Mitch McConnell recently hints, per Bloomberg, at the vote on the key issue during Thursday. Given the Democrats’ push for the agreement and McConnell's recent shift, the vote may have more assents and can favor the risk-on mood on passing.
Elsewhere, headlines concerning the improvement in the US-China ties, circulated mainly in China, favored the market sentiment and the AUD/USD prices. The news depends upon the latest communications between US President Joe Biden and his Chinese counterpart Xi Jinping. Biden and Xi Jinping previously respected the Taiwan agreement and chatters are also loud that they meet, virtually, by the year-end. Furthermore, the US also considered exclusion request for China imports, which is under public preview.
However, comments from Secretary of State Antony Blinken, relating to China’s action over the Taiwan issue and a push to act responsibly in matters relating to Evergrande poke the optimism.
Also challenging the risk appetite is the recently rising covid numbers from Australia, up at 2,231 at the latest. Though, ump in the vaccinations allows policymakers to hint at easing the virus-led controls sooner.
Talking about data, a three-month high US ADP Employment Change, 568K versus 340K prior, underpins hopes for a strong US NFP print. At home, Australia’s AiG Performance of Services Index for September rose to 45.7 from 45.6 while the weekly prints of ABS Wages and Payroll figures came in mixed.
Amid these plays, S&P 500 Futures rise 0.36% while the US 10-year Treasury yields gain 1.2 basis points to 1.536% at the latest.
US policymakers’ voting on the debt ceiling extension will be the key while the weekly jobless claims and China’s return on Friday will be the key for AUD/USD traders ahead of the US jobs report for September.
Technical analysis
Despite staying past 10-DMA near 0.7255 so far during the current week, AUD/USD bulls need to cross the 50-DMA hurdle of 0.7306 on a daily closing basis to retake the controls.
Author
Anil Panchal
FXStreet
Anil Panchal has nearly 15 years of experience in tracking financial markets. With a keen interest in macroeconomics, Anil aptly tracks global news/updates and stays well-informed about the global financial moves and their implications.
