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  • AUD/USD steps back from intraday top, snaps three-day losing streak.
  • Queensland recorded new community transmission case of COVID-19.
  • Fed’s Daly cites US employment fears, EU policymakers signal further restrictions while China sanctions UK over Xinjiang comments.
  • Risk catalysts remain as the key ahead of US session where Fed’s preferred inflation measure will be important to watch.

AUD/USD fades recovery moves while declining to 0.7588, following its recent run-up to 0.7600, during the early Friday’s trading. Although a pullback in the US dollar and the risk-on mood earlier favored the aussie pair to bounce off a multi-day low, fresh covid transmission in Queensland weigh on the quote off-late.

“Queensland has recorded one  new case of locally transmitted coronavirus, with a 26-year-old  Brisbane man infectious in the community since last Friday,” said the ABC News in its latest release. This comes in contrast with the New South Wales (NSW) readiness to lift virus-led restrictions, including mask mandate from Monday.

Also challenging the quote could be China’s fresh sanctions on the UK individuals and entities over Xinjiang comments. Furthermore, European policymakers’ fears of the coronavirus (COVID-19) resurgence in the bloc seem to have an extra negative impact on the sentiment.

It should, however, be noted that the comments from San Francisco Fed President Mary C. Daly cited the US employment fears and is likely to test the bears amid hopes of strong vaccination drive and further stimulus from US President Joe Biden. Additionally, the World Bank’s upbeat economic forecast for China and Asia-Pacific region.

Also on the positive side are the expectations of the RBA’s Quantitative Easing (QE) extension, conveyed by Westpac, with an additional 100 billion Aussie dollars towards October 2022. “It is unlikely that the FED will have made sufficient progress towards its goals by October this year to warrant scaling back its asset purchases. Were the RBA to taper it will expose the AUD and signal to the market that it has begun tightening,” said Westpac.

Amid these plays, S&P 500 Futures trims early Asian gains while flashing 0.10% green signs. The US 10-year Treasury yield extends the previous day’s run-up with 1.1 basis points of an upside whereas the US dollar index (DXY) eases from November 18 top marked on Thursday.

Although a light calendar may disappoint momentum traders, risk catalysts have recently offered good moves and the US Core PCE is on the way. Hence, AUD/USD becomes a worth-watching pair.

Technical analysis

Not only the 0.7600 threshold but 100-day SMA near 0.7615-20 also challenge AUD/USD recovery.