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  • AUD/USD staged a modest bounce of around 25-30 pips from near one-month lows.
  • A follow-through uptick in the US bond yields underpinned the USD and capped gains.
  • Investors now look forward to the US monthly employment details for a fresh impetus.

The AUD/USD pair managed to recover the early lost ground to near one-month lows and was last seen hovering near the top end of its daily trading range, just above the 0.7700 mark.

The US dollar stood tall near three-month highs amid some follow-through uptick in the US Treasury bond yields, supported by Fed Chair Jerome Powell’s remarks on Thursday. Speaking at an online event hosted by the Wall Street Journal, Powell did not indicate the need for any immediate action to curb the recent sharp rise in long-term yields. This, in turn, disappointed some investors and pushed the US bond yields sharply higher.

The violent sell-off in the US fixed income market raised fears about distressed selling in other asset classes and took its toll on the global risk sentiment. This was evident from a softer tone around the equity markets, which provided an additional boost to the safe-haven greenback and weighed on the perceived riskier aussie. The AUD/USD pair edged lower through the first half of the Asian session and fell to the lowest level since February 8.

The downtick, however, lacked any follow-through selling and stalled near the 0.7685 region. Given the overnight slump of nearly 100 pips, the subsequent bounce of around 25-30 pips could be solely attributed to some intraday short-covering. Investors now seemed reluctant to place any aggressive bets and preferred to move on the sidelines ahead of Friday’s release of the closely watched US monthly jobs report – popularly known as NFP.

The US economy is expected to have added 182K new jobs in February, up from 49K in the previous month. Meanwhile, the unemployment rate is anticipated to hold steady at 6.3% during the reported month. A stronger than expected reading will add credence to the narrative of a relatively faster US economic recovery and continue to benefit the greenback. Hence, any meaningful uptick around the AUD/USD pair runs the risk of fizzling out rather quickly.

Technical levels to watch