AUD/USD flirting with lows, below mid-0.7500s ahead of NFP

   “¢   Bulls seemed little impressed by today’s stronger Chinese manufacturing PMI.
   “¢   Subdued USD demand offset by surging US bond yields and keeps exerting pressure.
   “¢   Focus remains on the key US monthly jobs report, especially wage growth data.

The AUD/USD pair kept losing ground through the mid-European session on Friday and is currently placed at the lower end of its daily trading range, just below mid-0.7500.

The pair extended overnight rejection slide from the 0.7600 neighborhood, or 1-1/2 week tops, and failed to gain any positive traction from better-than-expected Chinese manufacturing data. In fact, Caixin China manufacturing PMI remained in expansion territory for the 12th consecutive month and bettered consensus estimates, albeit did little to revive demand for the China-proxy Australian Dollar.  

Traders also seemed to have largely ignored subdued US Dollar price action, with a mildly positive trading sentiment around copper prices also doing little to lend any support to commodity-linked currencies – like the Aussie.  

Meanwhile, resurgent US Treasury bond yields, leading to deepening of negative yield differential between Australian and US bonds and would reinforce monetary policy divergence between the Fed and RBA, was further seen impacting negatively on the major.  

Moving ahead, investors’ focus on Friday will remain on the release of keenly watched NFP report, especially wage growth figures, which if betters estimates should provide a lift to the greenback and turn the pair vulnerable to resume with its depreciating move that started in late January.  

Technical level to watch

A follow-through selling has the potential to continue dragging the pair further towards the key 0.7500 psychological mark en-route its next major support near the 0.7450-45 region. On the flip side, the 0.7600 handle might continue to act as an immediate hurdle, above which a bout of short-covering could lift the pair further towards the 0.7655-60 supply zone.