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  • AUD/USD stays pressured around weekly low, fades bounce off recent bottom surrounding 0.7710.
  • Fed’s Bullard, FOMC Minutes propelled tapering talks, mixed data at home also praised bears.
  • Aussie Consumer Inflation Expectations, Employment data may raise bars for recovery.
  • Risk catalysts, Fed chatters and US Jobless Claims will be important as well.

AUD/USD holds lower ground near 0.7725-30, after posting the heaviest losses in a week the previous day. In doing so, the Aussie pair justifies the risk-aversion wave, which propelled US Treasury yields and triggered US dollar bounce, near the weekly bottom amid early Thursday morning in Asia.

Fed fuels the risk-off”¦

Following a few days of mixed catalysts and rejection to tapering, the US Federal Reserve (Fed) officials are finally talking tapering. Be it St. Louis  Fed  President James Bullard or the Federal Open Market Committee (FOMC) Meeting Minutes, the latest market movers were from the Fed suggesting that the board members are concerned about the exit from easy money, despite portraying economic optimism. It should, however, be noted that the signals to start talking the tapering and doing it has a large gap between and hence this can trouble the markets in the meantime.

Elsewhere, the US-Russia tension renews and the fears of Indian covid strain also amplified, exerting additional downside pressure on the market sentiment.

At home, Westpac Consumer Confidence dropped to negative in May and Wage Price Index for Q1 couldn’t impress bulls.

Alternatively, vaccine optimism and signals of further US stimulus keep traders troubled.

Against this backdrop, market sentiment turned pessimistic and weighed on the Wall Street benchmarks, despite day-end bounce. Also portraying the risk-off mood could be the US dollar index (DXY) bounce from late February and a 3.4 basis points (bps) of a jump in the US 10-year Treasury yield.

While chatters concerning the Fed’s tapering and US dollar moves will be the key to watch, Aussie Consumer Inflation Expectations for May, expected 3.6% versus 3.2% can offer immediate direction ahead of the key jobs report for April. Forecasts suggest, headline Employment Change to drop from 70.7K to 15.0K but the Unemployment Rate is likely to remain unchanged at 5.6%. AUD/USD traders will be particularly interested in witnessing the effect of the end of the government’s employment support scheme.

Read:  Australian Employment Preview: End of JobKeeper wage subsidy impedes labor market recovery

Technical analysis

Contrary to the fundamentals, AUD/USD is yet to conquer the key supports, including an ascending trend line from April 13 near 0.7705, preceded by 50-day and 100-day SMAs close to 0.7725 and 0.7715, backs of a bounce towards 0.7800. However, any further upside needs to cross the 0.7820 hurdle to recall the buyers.


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