- AUD/USD fails to recover from four-month trough, holds lower ground of late.
- Global markets remained vulnerable on mixed US data amid cautious mood ahead of NFP.
- Downbeat China inflation, US President Biden’s budget proposal also strengthens risk-off mood.
- Equities drop but a retreat in yields weigh on US Dollar despite sour sentiment.
AUD/USD justifies its risk-barometer status while revisiting the sub-0.6600 area early Friday, after a failed attempt to recover from the four-month low. In doing so, the Aussie pair traces the downbeat equities and fears emanating from China, as well as failing to cheer the retreat in the US Treasury bond yield and the US Dollar, amid the market’s cautious mood ahead of the all-important US employment data.
Wall Street benchmarks closed with more than 1.5% daily losses each but the US 10-year and two-year Treasury bond yields eased to 3.92% and 4.87% versus 5.08% and 4.01% daily open respectively. It should be noted that the US Dollar Index (DXY) managed to pare some of the daily losses by the end of Thursday but failed to ignore the biggest daily fall in a week.
While tracing the key catalysts mixed employment clues from the US gain major attention. That said, US Initial Jobless Claims marked the biggest jump since January by rising to 211K for the week ended on March 03 versus 195K expected and 190K prior. Additionally, the Challenger Job Cuts were down and the Continuing Jobless Claims were up.
Elsewhere, disappointment from China’s monthly Consumer Price Index (CPI) and Producer Price Index (PPI) data for February also dims the prospects of recovery in the world’s second-largest economy and weighs on the risk profile. On the same line could be the fears of higher taxes in the world’s biggest economy, the US, as well as the political chaos relating to it as US President Joe Biden proposes raising corporation tax from 21% to 28% in his latest budget guide ahead of Friday’s release.
Above all, hawkish comments from Fed Chair Jerome Powell join dovish rhetoric from Reserve Bank of Australia (RBA) Governor Philip Lowe to keep the AUD/USD bears hopeful as traders await the key US Nonfarm Payrolls, expected 205K versus 517K prior.
Given the mixed early clues and the strong prints in the last, fewer odds favor the positive surprise from the US jobs report and hence the AUD/USD pair may witness a corrective bounce. The hopes of recovery also take clues from the quote’s repeated failure to drop below 0.6550.
Also read: Nonfarm Payrolls Preview: Five scenarios for the Fed, USD and stocks reactions, with probabilities
Technical analysis
AUD/USD dribbles inside a 100-pip trading range between 0.6640 and 0.6540 comprising levels marked during late October and November 2022.
Information on these pages contains forward-looking statements that involve risks and uncertainties. Markets and instruments profiled on this page are for informational purposes only and should not in any way come across as a recommendation to buy or sell in these assets. You should do your own thorough research before making any investment decisions. FXStreet does not in any way guarantee that this information is free from mistakes, errors, or material misstatements. It also does not guarantee that this information is of a timely nature. Investing in Open Markets involves a great deal of risk, including the loss of all or a portion of your investment, as well as emotional distress. All risks, losses and costs associated with investing, including total loss of principal, are your responsibility. The views and opinions expressed in this article are those of the authors and do not necessarily reflect the official policy or position of FXStreet nor its advertisers. The author will not be held responsible for information that is found at the end of links posted on this page.
If not otherwise explicitly mentioned in the body of the article, at the time of writing, the author has no position in any stock mentioned in this article and no business relationship with any company mentioned. The author has not received compensation for writing this article, other than from FXStreet.
FXStreet and the author do not provide personalized recommendations. The author makes no representations as to the accuracy, completeness, or suitability of this information. FXStreet and the author will not be liable for any errors, omissions or any losses, injuries or damages arising from this information and its display or use. Errors and omissions excepted.
The author and FXStreet are not registered investment advisors and nothing in this article is intended to be investment advice.
Recommended content
Editors’ Picks
GBP/USD stays weak near 1.2400 after UK Retail Sales data
GBP/USD stays vulnerable near 1.2400 early Friday, sitting at five-month troughs. The UK Retail Sales data came in mixed and added to the weakness in the pair. Risk-aversion on the Middle East escalation keeps the pair on the back foot.
EUR/USD extends its downside below 1.0650 on hawkish Fed remarks
The EUR/USD extends its downside around 1.0640 after retreating from weekly peaks of 1.0690 on Friday. The hawkish comments from Federal Reserve officials provide some support to the US Dollar.
Gold: Middle East war fears spark fresh XAU/USD rally, will it sustain?
Gold price is trading close to $2,400 early Friday, reversing from a fresh five-day high reached at $2,418 earlier in the Asian session. Despite the pullback, Gold price remains on track to book the fifth weekly gain in a row.
Bitcoin Price Outlook: All eyes on BTC as CNN calls halving the ‘World Cup for Bitcoin’
Bitcoin price remains the focus of traders and investors ahead of the halving, which is an important event expected to kick off the next bull market. Amid conflicting forecasts from analysts, an international media site has lauded the halving and what it means for the industry.
Israel vs. Iran: Fear of escalation grips risk markets
Recent reports of an Israeli aerial bombardment targeting a key nuclear facility in central Isfahan have sparked a significant shift out of risk assets and into safe-haven investments.