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  • AUD/USD fails to keep corrective pullback from over three-month low of 0.7001 flashed on Thursday.
  • King dollar keeps the reins as upbeat US data, ECB’s dovish rhetoric join covid fears, US election uncertainty.
  • Aussie PPI, risk catalysts remain as the key to follow.

AUD/USD fades the bounce off 15-week low, flashed the previous day, as it steps back from 0.7042 to 0.7030 on Friday’s Asian open. The pair dropped below September month’s bottom on Thursday as the US dollar index (DXY) refreshed monthly top while cheering welcome US GDP, Jobless Claims data. Also favoring the USD were the fears of the coronavirus (COVID-19) and downbeat comments from the European Central Bank President Christine Lagarde, not to forget about the cautious mood ahead of the US presidential election.

Upbeat US data, safe-haven demand favor greenback bulls…

Be it the better-than-expected US third quarter (Q3) GDP and weekly Jobless Claims or ECB’s hint of future easing, not to ignore the pandemic-led pessimism and US election woes, the US currency benefited from everything.

The preliminary reading of the US Q3 GDP rose past-31% market consensus to 33.1% whereas Initial Jobless Claims 4-week Average eased from upwardly revised 812.25K to 787.25 for the period ended on October 23. On the other hand, the ECB matched market forecasts of announcing no changes to the current monetary policy. However, President Lagarde’s readiness to combat the economic pessimism, backed by the COVID-19, with all available tools drew traders towards the greenback. Furthermore, partial lockdowns in Germany and France, coupled with the fears of the UK’s total activity restrictions, join the pre-US presidential election cautious sentiment to favor the USD.

Even so, Wall Street managed to rebound as hopes of upbeat earnings from the tech giants fuelled S&P 500 and Nasdaq 100.

Moving on, Australia’s Producer Price Index (PPI) data for Q3 and Private Sector Credit for September will decorate today’s economic calendar. While Private Sector Credit is expected to rise from 0.0% to 0.2% MoM, PPI can also recover from -1.2% previous readouts to -0.7% on a QoQ basis. In the case of the US, October month’s Chicago Purchasing Managers’ Index and Michigan Consumer Sentiment Index will accompany Core Personal Consumption Expenditure – Price Index for September.

Other than the data, the aforementioned risk stories will also be important to watch for AUD/USD traders. Among them, the virus and the US election gain major attention.

Technical analysis

Despite dropping below the September month’s low, to test the lowest point since July 20, AUD/USD is yet to break the 0.7000 psychological magnet before targeting the 200-day EMA level around 0.6950. Corrective recovery towards a 50-day EMA level of 0.7135 can’t be ruled out if the quote manages to clear the immediate upside hurdle of 0.7065, comprising the 100-day EMA.