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  • AUD/USD seesaws near 0.7150 after bouncing off 0.7135.
  • Virus woes, US-China jitters and upbeat performance of the USD weighed on the quote.
  • Upbeat comments from WH Adviser Kudlow, day-end consolidation recently underpinned the quote.
  • RBA Governor Lowe’s Testimony, China Industrial Production, Retail Sales awaited.

AUD/USD struggles to keep the recent recovery from 0.7135 while taking rounds to 0.7150 at the start of Friday’s Asian session. The aussie pair dropped on Thursday amid mildly active markets and increasing odds of the US economic recovery, which in turn underpinned US Treasury yields. Adding to the bearish case, of the pair, were trade-negative comments from US President Donald Trump and Trade Representative Robert Lighthizer that later-on got the opposite headlines and lost importance.

V-shaped recovery in the US?

Following upbeat inflation data, better-than-forecast prints of weekly Initial Jobless Claims backs US President Trump’s economic optimism and helps US dollar to remain on the front foot. The labor market indicator weakened to 963K versus 1120K.

On the contrary, American policymakers’ failures to restart the stimulus talks joins uncertainty surrounding the coronavirus (COVID-19), amid soft numbers with lesser testing, to challenge the market sentiment. Furthermore, US President Trump keeps disliking China for the virus and cares little for phase one deal while USTR Lighthizer announced tariffs on Europe over airbus. Though both these negative catalysts were later-on countered by the bloc’s intention to solve airbus dispute and White House (WH) Adviser Larry Kudlow’s upbeat comments concerning China.

It should also be noted that welcome figures of Australia’s July month jobs data couldn’t please the AUD for long as markets anticipate a blow to figures following the latest lockdowns in Victoria. Elsewhere, rising COVID-19 numbers from Germany also weigh on the market sentiment and offered a distant pressure onto the pair.

Against this backdrop, US 10-year Treasury yields gained 3.1 basis points to 0.717% whereas Wall Street benchmarks traded mixed by the end of Thursday.

Looking forward, RBA Governor Philip Lowe’s Testimony in front of the House of Representatives’ Standing Committee on Economics will precede China’s July month data-dump to direct the pair’s immediate moves. While RBA’s Lowe will be watched to gain extra clarifications on his latest bearish bias, China’s Industrial Production and Retail Sales also become important due to the trading bond between the two. The forecast suggests, Industrial Production to rise from 4.8% to 5.1% whereas Retail Sales may also recover from -1.8% to +0.1%.

Technical analysis

21-day EMA, currently around 0.7120 restricts the pair’s immediate downside moves ahead of 0.7065/60 area comprising July 24 low and June 10 high. On the contrary, 0.7200 becomes immediate resistance ahead of the monthly top near 0.7245.