- AUD/USD bulls catch a breather, still above Friday’s low of 0.6930, after a seven-day winning streak.
- Risk markets remain upbeat after Friday’s US jobs report, China’s trade data favor the bulls.
- Australian markets are off due to the Queen’s Birthday celebration.
- Upbeat from the US, China, also concerning the coronavirus, could offer immediate direction.
AUD/USD picks up the bids near 0.6975 amid the early Monday morning in Asia. China’s upbeat trade data, published on Sunday, seems to have offered the immediate direction to the Aussie pair. However, boost to the risk-on sentiment, mainly after Friday’s strong US employment data, is likely to have put a floor beneath the Aussie pair’s rise.
China’s May month Trade Balance beat $39B forecast with $62.93B, the record high. Details suggest that the Exports recovered from -7.0% expected to -3.3% whereas Imports dropped way beneath -9.7% market consensus to -16.7%. While the coronavirus (COVID-19) led lockdowns are likely behind the import’s plunge, medical exports seem to have helped the overall trade surplus.
Friday’s US employment report for May surprised markets with the increase in headlines Nonfarm Payrolls by 2.5 million in May versus expectations of -8 million. Further, the Unemployment Rate also receded from 19.8 forecast to 13.3%.
Following the upbeat data, the market’s hope for economic recovery gained additional momentum, which in turn favored the high yielding assets like the Australia dollar.
Additionally, soothing pains of the US protests and a likely merger between the major drug producers, AstraZeneca and Gilead, also solidifies the trading sentiment.
Against this backdrop, the US 10-year treasury yields rose heavily towards 0.90% mark whereas Wall Street also marked heavy gains at the end of Friday’s trading. It’s worth mentioning that the US stock futures are mildly positive by the press time.
Considering the absence of Australian players from the markets, due to the Queen’s Birthday holiday, traders might look for qualitative catalysts for fresh impulse amid a light overseas calendar.
Technical analysis
Although RSI conditions do create the doubt over the Aussie pair’s further upside, the pair’s sustained trading beyond the mid-January top, near 0.6930/35, keeps the bulls hopeful to refresh the yearly high above 0.7040. In doing so, the quote might scratch the 0.7050 in a run-up to target July 2019 high surrounding 0.7085.
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