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AUD/USD pares weekly losses below 0.7200 with eyes on yields, US NFP

  • AUD/USD consolidates the first weekly loss in three around a fortnight low.
  • NSW recalls some virus-linked restrictions, Treasurer Frydenberg hints at RBA review.
  • Sino-American tension renew, PBOC withdraws most funds in two-month with hints of further easing.
  • US Treasury yields retreat ahead of all-important NFP.

AUD/USD licks its wounds near a two-week low, hovering around 0.7170-80 amid Friday’s Asian session. In doing so, the quote rises 0. 10% intraday while snapping a two-day downtrend, not to forget staying on course to print the first weekly gain in three.

The Aussie pair’s latest gains could be linked to the pullback in the US dollar, as well as hopes of further monetary policy easing from the People’s Bank of China (PBOC). Also supporting the AUD/USD pair’s counter-trend traders could be the downbeat prints of US inflation expectations, as measured by the 10-year breakeven inflation rate per the St. Louis Federal Reserve (FRED) data. Additionally, downbeat prints of the US Factory Orders, Weekly Jobless Claims, ISM Services PMI and Good Trade Balance also underpin the latest corrective pullback of the Aussie pair.

It should be noted that the People’s Bank of China (PBOC) withdrew 660 billion yuan on a net basis for the week during this week's open market operations, marking it the biggest move in two months. However, hints of the PBOC’s further easing remain on the table considering the latest virus woes, which reinstated activity restrictions in Shenzhen, as well as on fears of firmer Chinese yuan (CNY), the same can help AUD/USD going forward.

Alternatively, Aussie Treasurer Josh Frydenberg showed commitment to a broad-based, independent review of the Reserve Bank of Australia (RBA) and the nation’s monetary policy settings after this year’s election, per the Australian Financial Review (AFR), challenges the AUD/USD bulls.

On the same line are chatters over Japan and the US dislike for Human Rights violations in Xinjiang and Hong Kong as well as the Global Times (GT) news mentioning the US-China trade tussles. GT cited the China Ministry of Commerce while saying, “China to impose anti-dumping duties on imports of polyphenylene ether (PPE) from the US starting from Friday.”

Above all, cautious sentiment ahead of the US jobs report for Friday and hawkish Federal Open Market Committee (FOMC) Meeting Minutes, as well as the latest Fedspeak, challenge the AUD/USD buyers amid hopes of faster rate hikes and balance sheet normalization.

If we take a look at the US jobs report forecasts, the headline Nonfarm Payroll (NFP) is expected to rise from 210K to 400K while the Unemployment Rate may have eased to 4.1% from 4.2% prior. The underemployment rate, however, is likely rising from 7.8% to 8%. As a result, the AUD/USD is likely set for the first weekly loss in three.

Read: Nonfarm Payrolls Preview: A strengthening labor market backs a tighter monetary policy

Technical analysis

Given the previous day’s confirmation of rising wedge bearish chart pattern, coupled with the bearish MACD signals and downbeat RSI, AUD/USD prices are likely to remain pressured towards the year 2021 low near 0.7000. However, the 23.6% Fibonacci retracement (Fibo.) of the mid-November to early December downturn around 0.7090 may offer an intermediate halt during the fall.

Meanwhile, corrective pullback eyes the support-turned-resistance line of the aforementioned wedge, near 0.7190, a break of which could escalate the recovery moves towards the 61.8% Fibo. level near 0.7230.

Additional important levels

Overview
Today last price0.7168
Today Daily Change0.0004
Today Daily Change %0.06%
Today daily open0.7164
 
Trends
Daily SMA200.7195
Daily SMA500.7234
Daily SMA1000.7287
Daily SMA2000.7437
 
Levels
Previous Daily High0.7226
Previous Daily Low0.7144
Previous Weekly High0.7278
Previous Weekly Low0.7204
Previous Monthly High0.7278
Previous Monthly Low0.6993
Daily Fibonacci 38.2%0.7175
Daily Fibonacci 61.8%0.7195
Daily Pivot Point S10.713
Daily Pivot Point S20.7097
Daily Pivot Point S30.7049
Daily Pivot Point R10.7211
Daily Pivot Point R20.7259
Daily Pivot Point R30.7292

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.

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