- AUD/USD aims for the yearly top of 0.7040 after the pause in upside around 0.6965.
- Global markets remain mostly upbeat amid hopes of faster recovery, further stimulus from the Fed.
- Wall Street pleases optimists with NASDAQ rising to record highs and S&P 500 up above 1.0%.
- The return of Aussie traders from the extended weekend will be the key, Aussie figures from the NAB and ANZ likely decorating the calendar.
AUD/USD stays above 0.7000, currently around 0.7020, as the Aussie traders begin the week after enjoying a holiday the previous day. The pair recently benefited from the boost in the global risk appetite following upbeat data from the US and China suggesting faster economic recovery ahead. The optimism could also be witnessed in Wall Street’s stellar performance and can be considered as additional fuel to the Aussie pair’s rally.
Faster recovery from the pandemic?
Following the surprise increase in the US Nonfarm Payrolls (NFP) and Canadian Employment Change, record Trade Surplus from China also fuelled the hopes that the global economy could be on its track soon. Other than the data, receding protests in the US and central banks’ readiness to keep pumping the economy, backed by soothing pain of the coronavirus (COVID-19), also favors the risk barometer Aussie pair’s run-up.
It should also be noted that the US-China tussle continues to offer background music, but was largely ignored amid all-pervasive optimism and a light calendar. After China ignored US President Donald Trump’s push to remove punitive measures on American lobsters, the Trump administration is moving towards passing a bill that could levy fresh sanctions on Beijing’s diplomats involved in violations of human rights in Uyghur.
Against this backdrop, Wall Street marked a stellar performance with NASAQ rising to the record high of 9,927.12, up 1.13% on a day, whereas DJI30 and S&P 500 also flashed over 1.0% gains by the end of Monday’s session. It’s worth mentioning that the US 10-year Treasury yields stepped back from Friday’s rally while trimming 2.6 basis points (bps) to 0.879% at the end of the week’s first trading day.
In addition to observing how the Aussie traders respond to the AUD/USD pair’s rally, May month figures of National Australia Bank’s (NAB) Business Confidence and Business Conditions, coupled with ANZ Job Advertisement, will be important to watch as an immediate catalyst. Considering the data, Westpac said, “May ANZ job ads are out. April saw a record contraction in April as employers froze recruitment. The market will be looking for signs of recovery in the May NAB business confidence survey after conditions collapsed over March and April.”
Additionally, the US-China headlines and major risk catalysts like protests in the US and the global virus updates will also be the keys to follow for fresh direction.
Technical analysis
Considering the pair’s sustained trading beyond 0.7000, buyers are likely to keep reins. However, overbought RSI conditions challenge the pair’s rally. That said, multiple highs marked during October 2019 and January 2020 highlight 0.6940-30 area as near-term key support-zone ahead of February month’s top near 0.6775. Meanwhile, December 31, 2019 high near 0.7045 and July 2019 peak surrounding 0.7085 could please the bulls during the further upside.
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