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  • AUD/USD picks up bids inside a familiar trading range, reverses weekly losses.
  • US jobless claims, receding fears of tapering and jump in cryptocurrencies back risk-on mood.
  • Preliminary Australia Retail Sales, US PMIs will be the key data to watch, risk catalysts occupy driver’s seat.

AUD/USD edges higher around 0.7775, keeping the previous day’s recovery moves, during early Friday morning in Asia. The Aussie pair reversed most of the week’s losses on Thursday as risk-on mood favored the bulls. Though, nearness to the key Aussie data and a light calendar probe the bulls of late.

Optimism or consolidation?

Following the US FOMC Minutes-led risk aversion wave, which propelled the US dollar and weighed on Antipodeans, market sentiment recovered on Thursday. While the Fedspeak keeps shrugging off the reflation fears and need for tapering, higher than expected drop in the US Weekly Jobless Claims, from 450K to 444K, taking down the 4-week Average to 504.75K versus 535.25K prior, recalled the bulls.

At home, the Aussie jobs report again proves the RBA’s cautious employment forecasts right while inflation expectations improved for May.

Also on the positive side could be the hopes that geopolitical tension in Gaza will soon recede while nuclear talks with Iran aren’t dumped like always.

Additionally contributing to the risk-on mood could be the jump in the cryptocurrencies, mostly reversing Wednesday’s heavy draw, amid comments from Elon Musk and other price-positive factors.

It should, however, be noted that Thursday’s market moves could best be described as consolidation than the bull’s power-play as traders keep struggling for clear direction over the Fed’s next moves.

Amid these plays, Wall Street benchmarks buck a three-day losing streak, led by Nasdaq, while the US 10-year Treasury yield drops 5.5 basis points (bps) to 1.628% by the press time.

Moving on, preliminary readings of Australia’s Retail Sales for April and the US activity numbers for May will be crucial to watch as traders seek more clues to justify economic recovery hopes. Given the likely weakness in the Aussie Retail Sales, from 1.3% to 0.5% YoY, as well as downbeat forecasts for US Markit PMIs, AUD/USD may battle the near-term important hurdle. Though, trade tussles with China and geopolitical fears, not to forget doubts over the Fed’s next move, can keep the bulls chained.

Technical analysis

Unless breaking a confluence of the five-week-old rising trend line and 50-day SMA, near 0.7700-7690, AUD/USD remains directed to the 0.7820 hurdle comprising multiple tops marked since January 2021.

 

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