AUD/USD refreshes two-week top above 0.7300 despite covid, geopolitical jitters

• AUD/USD picks up bids to extend Friday’s upside momentum.
• NSW reports another blockbuster daily covid count, NZ reports softer infections.
• Australia Company Gross Operating Profits jump 7.1% in Q2.
• Risk catalysts remain as the key amid a light calendar ahead of US session.

AUD/USD extends Friday’s run-up, the biggest since early June while refreshing a fortnight high around 0.7320, up 0.08% intraday, during Monday’s Asian session. In doing so, the Aussie pair reacts to the upbeat economics at home while ignoring record coronavirus cases.

Aussie Company Gross Operating Profits crossed +3.0% market consensus and -0.3% prior with +7.1% QoQ figures for the second quarter (Q2). On the contrary, Australia's inventories dropped below 1.2% QoQ forecast and 2.4% prior to 0.2% during the stated period.

Elsewhere, South Australia and Queensland report zero cases but a record run-up in the daily infections in New South Wales (NSW) and Victoria propel the national count to 1,368 versus 1,328 marked the previous day. It should be observed that the virus numbers from New Zealand and China eased of late but the figures from the UK and the US keep posing fears of Delta covid variant.

Other than the virus woes, Hurricane Ida and the US-China tensions, coupled with the Western dislike for the Taliban’s ruling in Afghanistan, also challenge the AUD/USD bulls due to the pair’s risk barometer status. While the Ida is eased to category 3 storm, US President Joe Biden’s criticism of Beijing’s meddling into the virus origin inquiry and refrain to hold Taliban accountable for the latest attack on the Kabul airport flash mixed signals.

It’s worth noting that Fed Chair Powell buoyed global risk appetite on Friday, despite signaling taper this year, as the central banker refrained from offering any exact timing of tapering and indicated a gap between the taper and rate hike. Also, comments like “We will be carefully assessing incoming data and the evolving risks,” offered extra confirmation to the markets that the easy money policy is here to stay, at least for now.

Amid these plays, S&P 500 Futures struggle to keep Friday’s gains above 4,500 whereas the US 10-year Treasury yields remain pressured around 1.30% by the press time.

Moving on, a light calendar in Asia keeps AUD/USD traders searching for fresh clues and extends the previous upside in case of positives. Meanwhile, the US Pending Home Sales for July and Dallas Fed Manufacturing Business Index for August will offer additional factors during the North American session.

Technical analysis

AUD/USD buyers are on the way to the monthly top surrounding 0.7430 but an August 11 high near 0.7390 may offer immediate resistance to the pair. Alternatively, a daily closing below the two-month-old downward sloping trend line, around 0.7290 now, will be necessary for the seller’s entry.