- AUD/USD remains on the back foot even as bears step back from multi-day low marked earlier in the week.
- RBA’s Lowe cools down rate hike expectations despite cheering Australia’s economic recovery.
- RBA quarterly statement, final print of Aussie Retail Sales can entertain traders ahead of the US NFP.
- US stimulus headlines, market frenzy chatters and virus/vaccine news are also important to watch.
AUD/USD wavers around 0.7600 following not-so-surprise comments from RBA Governor Philip Lowe amid Friday’s early Asian session. The reason could be traced from the broad US dollar strength and the traders’ wait for RBA’s quarterly economic forecasts as well as the pre-NFP trading lull.
RBA’ Lowe said, “Economic recovery in Australia started earlier and is stronger than we expected.” However, his comments like, “Before increasing the cash rate, the board wants to see inflation sustainably within the 2 to 3 percent target range, meeting this condition will require a tighter labor market and stronger wages growth than we are currently forecasting,” seems to have probed the bulls.
Read: RBA’s Lowe: Interest rates are going to be low for quite a while yet
Risks remain positive as the market expects a US $1.9 trillion covid relief package while also cheering the global COVID-19 vaccination drive and upbeat development over the research on pandemic’s cure. On Thursday, the US Democratic Party members tackled House Republican’s opposition and pushed their proposal to fast-track the much-awaited stimulus to the Senate. It should be noted that the Republicans have recently written to US President Joe Biden that they want to continue aid talks with a $618 billion offer. Also increasing the odds of relief were comments from US Treasury Janet Yellen and Fed policymakers who highlighted the dire need for the same.
Elsewhere, coronavirus immunizations jump with the UK reaching it’s 10 million milestone and jabs continue in the key virus-infected regions like the US, Europe and Asia. Additionally, recent updates conveying upbeat results of the headlines vaccines, like AstraZeneca, Pfizer and Sputnik, offer extra strength to the vaccine optimism.
At a time when the stimulus and vaccine hopes echo the market’s upbeat mood, Europe’s downbeat data and fears of negative rates push trades to the US dollar. The greenback also gains support from the retail rush, due to its safe-haven nature, as the US dollar index (DXY) jumps to the highest levels since December 01.
While portraying the risk-on mood, Wall Street benchmarks gained over 1.0% each, with S&P 500 and Nasdaq 100 marking record high closing.
Having seen the initial market impact of RBA Governor Philip Lowe’s testimony, AUD/USD traders will wait for the quarterly economic forecast from the Aussie central bank and the final reading of Australia’s December month’s Retail Sales for fresh impulse. While the RBA forecasts may pour cold water on the face of bulls hiding behind Governor Lowe, downbeat Retail Sales can add weakness to the quote. Above all, the US NFP becomes the key for today.
Read: Nonfarm Payrolls Preview: Dollar needs a strong number to keep rallying
Technical analysis
Sustained trading below the previous support area comprising multiple levels since December, also including 10-day SMA off-late, near 0.7650-40, keep AUD/USD bears hopeful to revisit the December 21 low around 0.7460.
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