AUD/USD looking to retake 0.7800 level ahead of remarks from Powell

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  • AUD/USD has been picking up in recent trade and now looks to retake the 0.7800 level
  • A pickup in commodity prices and risk appetite is helping risk-sensitive currencies like AUD.
  • Looking ahead, comments from Fed Chair Jerome Powell at 17:05GMT will be the major focus for FX markets.

AUD/USD has been picking up in recent trade and now looks to retake the 0.7800 level, having rebounded from its 21-day moving average in the 0.7770s earlier in the session. A break above the 0.7800 level might open the door to a move back to Wednesday’s close to 0.7840 highs. At present, the pair is trading with gains of about 0.3% or 25 pips on the day.

Driving the day

Bullish OPEC+ headlines (OPEC+, in a surprise to markets, are said to be close to rolling over current output quotas for April, rather than increasing them) is giving crude oil markets a massive boost (WTI is currently more than 5% higher on the day and above the $64.00 level). This is giving commodity-linked currencies such as AUD (and also NZD and CAD) a boost. US data (Weekly Jobless Claims were in line with expectations) did not impact FX.

Data out of Australia was mixed last night, with the final estimate for Retail Sales growth in January coming in a touch weaker than anticipated at +0.5% MoM (exp. 0.6%) but the country’s trade surplus on the month coming in well above expectations at AUD 10.142B (exp. 6.5B), amid a 6% MoM jump in exports and a 2% MoM drop in imports. This was a record high monthly trade surplus and Capital Economics comment that “the rise in exports values was largely driven by a 14.2% m/m rise in iron ore exports due to the recent rally in iron ore prices”.

Looking ahead, comments from Fed Chair Jerome Powell at 17:05GMT will be the major focus for FX markets. Markets will be on notice for any comments Powell makes on 1) the recent rise in bond yields and 2) what policies the Fed might employ to calm things down if the rising in bond yields accelerates.

 

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