AUD/USD: Up for first weekly gains in four around 0.7750, Aussie Q1 GDP eyed

• AUD/USD keeps the immediate trading range after a two-day uptrend.
• US dollar weakness joined RBA comments to back the bulls.
• US ISM Manufacturing PMI details came in sluggish, Aussie/China PMIs were upbeat.
• Australia’s Q1 GDP may push the bulls amid downbeat forecasts, RBA's Debelle eyed as well.

AUD/USD wobbles around mid-0.7700s during the early Wednesday morning in Asia. The Aussie pair rose for two consecutive days in the last, overcoming the three-week downtrend, as market sentiment improves. However, cautious sentiment ahead of Australia’s first quarter (Q1) GDP checks the pair buyers of late.

ISM PMI couldn’t please the markets…

The full markets on Tuesday couldn’t cheer the key US ISM Manufacturing PMI for May even as the headline figures jump above 60.7 forecast and prior levels to 61.2. The reason could be traced to sluggish details of price paid and employment, which were sought for Friday’s Nonfarm Payrolls (NFP), not to forget confirming the strong prints of the US Core PCE Price Index for May, 3.1% YoY versus 2.9% expected.

In addition to the downbeat readings that eased pressure on the Fed, market sentiment also benefited from talks of US President Joe Biden’s stimulus. The Democratic Party member recently proposed a $6.0 trillion budget even as his $1.7 trillion infrastructure spending is in the pipeline.

Elsewhere, the Reserve Bank of Australia (RBA) signaled July as an action-packed day while matching wide market forecasts to neither change the benchmark rate nor bond purchase and yield targets on Tuesday. It’s worth noting that the monthly activity numbers from Australia and China matched slightly upbeat market forecasts and added to the AUD/USD strength the previous day.

Amid these plays, the US 10-year Treasury yield closed Tuesday’s North American trading session with 1.3 basis points (bps) of daily gains while the Wall Street benchmarks ended the day on mixed tunes. The indecision portrayed by the key risk catalysts seems to join the pre-GDP caution to recently test the AUD/USD bulls.

Other than the Aussie Q1 GDP, expected 1.5% QoQ versus 3.1% prior, market talks over the US inflation and stimulus, not to ignore the Fedspeak and comments from RBA Deputy Governor Guy Debelle also become important for the AUD/USD traders going forward. Of late, the Fed policymakers seemed to have eased their bias towards monetary policy adjustments while their Aussie counterparts also followed the footsteps, suggesting further hardships for the AUD/USD bulls.

Technical analysis

AUD/USD bulls attack a confluence of a three-week-old resistance line and 21-day SMA around 0.7760 that holds the key to the pair’s run-up towards the 0.7800 hurdle. Meanwhile, pullback moves can be ignored until the quote stays above the 50-day SMA level near 0.7720.