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  • AUD/USD bounces off yearly low, snaps four-day losing streak to refresh intraday high.
  • Aussie-China tussles, Fed rate concerns probe buyers, mildly bid S&P 500 Futures favors corrective pullback.
  • US Treasury yields, inflation expectations become the key.
  • Preliminary reading of Aussie Retail Sales for May, PBOC rate decision will offer immediate direction.

AUD/USD buyers poke the 0.7500 threshold, up 0.30% intraday, as traders consolidate recent losses ahead of Monday’s key events in Asia. The uptick in stock futures and the pre-data jitters back the latest corrective pullback in the Aussie prices around yearly low. However, the bears remain hopeful amid the Fed’s rate-hike concerns and the recent Aussie-China tussles.

S&P 500 Futures bounce off monthly low, up 0.16% around 4,148, as market players await more clues from the Fed to confirm the rate hike or tapering concerns triggered the last week. Also supporting the risk-barometer could be the chatters relating to US President Joe Biden’s infrastructure spending and Asia-Pacific nations’ recovery from the pandemic.

Even so, the US dollar index (DXY) stays bid on the safe-haven demand, backed by the downbeat US Treasury yields and the US inflation expectations. The early signals of the US inflation expectations, the 10-year breakeven inflation rate per the St. Louis Federal Reserve (FRED) data, dropped to the lowest since early March on Friday.

The reason could be traced from the comments of St. Louis Fed President James Bullard who forecasts Core PCE at 3.0% for 2021 and 2.5% for 2022 while backing the tapering to start in next year. Earlier last week, the US Federal Reserve (Fed) revised up inflation and growth forecasts while also unveiled the policymakers’ bullish bias on rates via the dot-plot. The same triggered speculations of the Fed’s much-awaited monetary policy consolidation.

It’s worth noting that Australia’s run-up to complain the World Trade Organization (WTO) over China’s imposition of tariffs on the country’s wine should have also weighed on the AUD/USD prices, but didn’t. Additionally, fears of the Delta variant of the covid and uncertainty over US President Joe Biden’s infrastructure and spending bill are extra negatives for the quote.

Even so, AUD/USD traders seem optimistic ahead of the preliminary readings of May month’s Retail Sales, expected 0.7% versus 1.0% prior, as well as a monetary policy decision of the People’s Bank of China. While Aussie data may portray the effects of a snap lockdown, PBOC could keep its status quo and battle the pair bears.

Following that Fed policymakers’ comments during the US session may provide clearer directions to the pair traders.

Technical analysis

Unless crossing 200-day SMA level near 0.7555-60, not to forget previous support line from December around 0.7580, AUD/USD prices remain directed to August 2020 top near 0.7420-15.