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AUD/USD: Looks to regain 0.7800 ahead of RBA’s Lowe, China data dump

  • AUD/USD begins the week with a downside gap of 12 pips.
  • US dollar benefited from upbeat data at home, rising treasury yields.
  • Stimulus, vaccine rollouts offer extra strength to the bulls.
  • RBA’s Lowe, China’s Retail Sales, Industrial Production will be the key.

Following a week-start gap-down to 0.7751, AUD/USD takes rounds to 0.7750, picking up bids off-late, during the early Monday morning in Asia. In doing so, the aussie pair extends Friday’s downbeat performance, mainly due to the US dollar strength, ahead of a speech from RBA Governor Philip Lowe as well as China’s February month Retail Sales and Industrial Production.

New week, old songs?

AUD/USD traders eye fresh direction from RBA’s Lowe to trim the latest bearish bias while also anticipating China, Australia’s largest customer, to print welcome numbers. However, major attention is given to the Treasury yields that keep singing the old songs of reflation and suggests dialing back to the easy money policies earlier than planned.

During the last week, US 10-year Treasury yields refreshed 13-month top while rising for the sixth consecutive week as traders cheered US President Joe Biden’s $1.9 trillion stimulus as well as hopes of faster vaccinations and economic recovery. The same helped the US dollar index (DXY) to rise to the late November levels before stepping back from 92.50 and closing in red before this week’s key Fed meeting.

Even so, DXY bounced off a one-week low on Friday to snap the previous three-day losing streak as the upbeat US economics joined rallying US 10-year Treasury yield. In a reaction, the AUD/USD prices dropped on a daily closing basis but managed to trim losses as equities remained upbeat.

At home, RBA seems to calibrate its bullish bias but hesitates to openly admit the odds of earlier scaling back of the easy money policies. Although the same should have helped the AUD/USD bulls, fears of liquidity crunch in equities and the US dollar strength weigh on the quote. Additionally, the recently grown fears of fresh US-China tussle and Canberra’s dislike for Beijing’s move to redefine Hong Kong politics exert additional downside pressure on the quote.

On the contrary, AstraZeneca rejected claims of blood clots due to the usage of its vaccines whereas Novavax’s update to tame the UK covid variants also favors the risks.

Looking forward, RBA’s Lowe is to speak at Melbourne Business School’s online conference and may reiterate his cautious optimism, likely giving no major push to the AUD/USD prices. However, economics from China are likely to flash upbeat figures for February and may recall the bulls targeting 0.7800.

Technical analysis

A clear break above the two-week-old resistance line, now support, favors AUD/USD bulls to battle 21-day SMA, at 0.7785 now. However, January’s top and monthly high, respectively around 0.7820 and 0.7835, test immediate upside.

additional important levels

Overview
Today last price0.7756
Today Daily Change-7 pips
Today Daily Change %-0.09%
Today daily open0.7763
 
Trends
Daily SMA200.7787
Daily SMA500.7741
Daily SMA1000.7563
Daily SMA2000.7335
 
Levels
Previous Daily High0.7801
Previous Daily Low0.7724
Previous Weekly High0.7801
Previous Weekly Low0.762
Previous Monthly High0.8008
Previous Monthly Low0.7562
Daily Fibonacci 38.2%0.7754
Daily Fibonacci 61.8%0.7772
Daily Pivot Point S10.7724
Daily Pivot Point S20.7686
Daily Pivot Point S30.7648
Daily Pivot Point R10.7801
Daily Pivot Point R20.7839
Daily Pivot Point R30.7877

Author

Anil Panchal

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.

More from Anil Panchal
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