- AUD/USD struggles to keep bounce off the day’s bottom.
- China trade surplus increase, import and exports jump in April.
- Risk appetite remains firm during a pre-NFP trading lull.
- US jobs report for April becomes the key, China headlines, covid news are extra catalysts to follow.
AUD/USD fades bounce off intraday low while taking rounds to 0.7775, down 0.10% on a day, during early Friday. In doing so, the Aussie pair pays a little heed to the upbeat trade data from China, not to forget mildly optimistic market sentiment.
China Trade Balance crossed $28.1B forecast and $13.8B prior with $42.85B release. Also, Imports rose past-42.5% expected to 43.1% whereas Exports grew 32.3% compared to 24.1% market consensus in April.
Read: China’s April Trade Balance: Trade surplus expands, imports and exports show a solid increase
Earlier in the day, the quarterly release of the RBA Monetary Policy Statement and China Caixin Services PMI for April helped AUD/USD to refresh intraday high. The RBA statement unveiled an upward revision to the GDP forecasts, also cutting down unemployment rate expectations, while reiterating the “no rate hike until 2024” line. China Caixin Services PMI, on the other hand, grew past-54.3 to 56.3 in April.
Read: AUD/USD bounces off intraday low towards 0.7800 on RBA Monetary Policy Statement
Not only the upbeat catalysts from the RBA and China but risk-on mood also favored AUD/USD bulls earlier in the day. Among the positives, the US and European Union’s (EU) support for covid vaccine patent waiver and rejection of reflation fears gain major attention.
However, China’s dislike for Australia, as signaled via the rejection of strategic trade dialogue, as well as the pre-US Nonfarm Payrolls (NFP) mood weigh on the market sentiment and AUD/USD prices as well. Also on the negative side could be Japan’s almost certain extension of virus-led emergency and record coronavirus (COVID-19) infections in India.
Amid these plays, S&P 500 Futures stay mildly bid whereas the US 10-year Treasury yields seesaw around 1.57%. Further, the US dollar index (DXY) stays pressured but refrains from moving much below 91.00.
Given the scheduled release of the US monthly employment report, coupled with high hopes from the crucial data, AUD/USD traders may remain cautious and keep mum around 0.7800 ahead of the release. Though, any surprise announcements concerning the virus and vaccine, as well as monetary/fiscal stimulus, will not be ignored.
Read: US April Nonfarm Payrolls Preview: Leading indicators point to another strong NFP
Technical analysis
Not only the failures to cross the 0.7800 threshold but sustained trading below 0.7820 horizontal hurdle, comprising multiple tops marked since April 20, also challenges AUD/USD buyers. On the contrary, a confluence of 50-day and 100-day SMA around 0.7705-10 becomes a tough nut to break for the bears.
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