AUD/USD: Mixed sentiment probes bounce off monthly bottom around 0.7700

AUD/USD fades recovery moves while battling with the 0.7700 threshold.

• Markets consolidate Fed-led losses but sharp moves in equities posed risk.
• Aussie Import-Export Price Index recovered, US GDP matched downbeat expectations.
• Australia’s Q4 Producer Price Index can offer intermediate moves, risk catalysts will be the key.

AUD/USD fizzles the corrective pullback from a one-month low while easing to 0.7683 during the early Friday’s Asian trading. The pair slumped to the lowest since late-December amid broad US dollar strength during the initial Thursday before global traders regained confidence amid vaccine hopes, US-China jitters and mixed clues from equities. Though, the latest recovery falls short of convincing the bulls as economic fears prevail.

Gamestop didn’t stop the game…

Although wild moves in Gamestop and following reactions from various brokers to tame the volatility helped ease market fears, the game took a new turn while propelling commodities amid chatters of diversion by the hedge funds. Though, the pessimism continues as the US House Financial Services Committee plans a hearing on short selling and online trading platforms. The story can weigh on risks and offer intermediate moves to the commodities and Antipodeans.

Read: Wall Street Close: Stocks recover from Wednesday woes, anger as retail traders face restrictions

Elsewhere, vaccinations are on and the latest updates suggest cures to the variants, which in turn help recede the pessimism. However, the European Union’s (EU) shortage of the jabs and the resulted tension with the UK probe the risk-on mood.

Moving on, news that the US Treasury is up for delaying the ban of American investments into the Chinese companies with alleged military ties, conveyed by the Financial Times (FT), also helped the risks.

It should, however, be noted that the downbeat US Q4 GDP, 4.0% versus 33.9% in Q3, backs the Federal Reserve’s economic fears. On the other hand, Australia’s fourth quarter (Q4) Import Price Index and Export Price Index grew from -2.4% and -1.3% QoQ priors to -1.0% and +5.5% respectively.

Against this backdrop, Wall Street benchmark retrace the previous day’s downside while the US 10-year Treasury yields also gain 3.8 basis points to 1.052% by press time.

Looking forward, updates concerning the likely brake on the equity market volatility and other risk catalysts like vaccine, virus and US-China tension can entertain AUD/USD traders ahead of Aussie Producer Price Index (PPI) for Q4, expected 0.1% versus 0.4% on QoQ.

Technical analysis

Despite taking a U-turn from 50-day EMA, at 0.7595 now, AUD/USD is yet to regain a place above 21-day EMA, currently around 0.7700, which in turn favors hopes of fresh declines.