- AUD/USD pares the biggest daily gains, holds lower ground near intraday low of late.
- Aussie NAB data came in firmer for July but August month Westpac Consumer Sentiment was softer.
- Risk-on mood fades amid hawkish Fed bets, pause in yields’ downside.
- Second-tier US employment data, risk catalysts will be important for fresh impulse.
AUD/USD holds remains depressed at around 0.6980, fading the bounce off intraday low near 0.6970, amid mixed Aussie data and sluggish markets during Tuesday’s Asian session. It’s worth noting, however, that the US dollar rebound and the cautious mood ahead of the US inflation data keep the pair sellers hopeful.
National Australia Bank’s Business Conditions and Business Confidence data for July printed upbeat results as the former rose to 20, versus 15 market consensus and 13 prior. That said, Business Confidence matched 7 forecasts while rising past 1 prior. On the contrary, Westpac Consumer Confidence Index for August eased to 81.2, below 83.8 prior.
Elsewhere, China marked a 20.1% YoY gain in passenger car sales during July, per china auto industry body CPCA.
It’s worth noting that the firmer odds favoring the Fed’s 0.75% rate hike in September join the Sino-American tussles over Taiwan to weigh on the market sentiment and exert additional downside pressure on the AUD/USD prices. Recently, US President Joe Biden’s dislike for China’s aggression towards recapturing Taiwan and criticism of House Speaker Nancy Pelosi’s visit to Taipei seemed to have probed the market optimists.
Amid these plays, the US 10-year Treasury yields remain inactive at around 2.75%, following nearly seven basis points (bps) of the downside on Monday and a 14-bps run-up on Friday. Also, S&P 500 Future trim early Asian session gains around 4,145 by the press time.
Looking forward, the US Nonfarm Productivity and Unit Labor Costs for the second quarter (Q2) could entertain AUD/USD traders. Forecasts suggest that the US Nonfarm Productivity could improve to -4.6% from -7.3% prior while Unit Labor Costs may ease to 9.5% versus 12.6% in previous readings.
Also read: US CPI Preview: It is the hard core that counts, five scenarios for critical inflation data
Technical analysis
AUD/USD seesaws between the 50-DMA and the downward sloping resistance line from late April. Given the firmer RSI and the lack of bearish MACD signals, the recent upside momentum of the pair is likely to extend.
However, a daily closing beyond the aforementioned resistance line, at 0.7025 by the press time, appears necessary for the bulls to keep reins. On the flip side, a break of the 50-DMA support near 0.6880 isn’t an open invitation to the AUD/USD bears as the resistance-turned-support from early April, at 0.6855 at the latest, will challenge the downside moves.
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