AUD/USD climbs to 0.7200 neighbourhood, over one-week tops

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  • AUD/USD continued scaling higher for the third consecutive session on Thursday.
  • The upbeat market mood undermined the safe-haven USD and remained supportive.
  • Renewed hopes for the US fiscal stimulus measures lifted the global risk sentiment.

The AUD/USD pair shot to over one-week tops during the first half of the trading action on Thursday, with bulls now eyeing a sustained move beyond the 0.7200 mark.

The pair to built on this week’s goodish bounce from the key 0.7000 psychological mark, or two-month lows and continued gaining traction for the fourth consecutive session on Thursday. The momentum was supported by a combination of factors – the upbeat market mood and a softer tone surrounding the US dollar.

The global risk sentiment got a strong boost on the back of renewed hopes for additional US fiscal stimulus measures. It is worth recalling that the US Treasury Secretary Steven Mnuchin told reporters that talks with House Speaker Nancy Pelosi made a lot of progress on long-awaited COVID-19 relief legislation.

The risk-on flow was evident from the prevalent bullish trading sentiment in the equity markets, which undermined the greenback’s safe-haven demand and benefitted the perceived riskier Australian dollar. The greenback was also pressured by conflicting remarks by Senate Majority Mitch McConnell on the fiscal aid, saying that the two sides remain far apart.

Meanwhile, the downside for the buck is likely to remain cushioned on the back of robust US macro data released on Wednesday. The ADP reported that private-sector employment grew by 749K in September as compared to 650K expected. Separately, the Chicago PMI surged to the highest level since the end of 2018 and reflected the resilience of the broader US economy.

Moreover, bulls might also refrain from placing any aggressive bets ahead of Friday’s release of the closely watched US monthly jobs report (NFP). This makes it prudent to wait for some strong follow-through buying beyond the 0.7200 mark before positioning for any further near-term appreciating move.

Market participants now look forward to Thursday’s US economic docket, featuring the releases of the final September Manufacturing PMI, Initial Weekly Jobless Claims, core PCE Price Index and the ISM Manufacturing PMI. This, along with developments over the US fiscal stimulus will influence the USD price dynamics and produce some trading opportunities.

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