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  • AUD/USD bulls catch a breath after the heaviest rise in a month.
  • Expectations of US-China trade talk resumption, Japan’s approval to Remdesivir and furthering of economic re-open in Europe favored risks.
  • Increasing odds for negative Fed rate, downbeat US data and comments from the Fed policymakers weigh on the US dollar.
  • RBA’s SOMP, US NFP populate the calendar, trade/virus updates also are the key.

AUD/USD holds onto the previous day’s recovery moves while taking the bids to 0.6500 at the start of Friday’s Asian session. In addition to the risk-on sentiment, led by trade-positive signals and upbeat news for virus cure, broad US dollar weakness also propelled the Aussie pair to be the gainer of Thursday. In doing so, the quote also registered the biggest rise in a month while also carrying the move by the press time.

Bulls cheer trade/virus positives, downbeat greenback…

After a few days of the US policymakers’ verbal attack on China, Bloomberg came out with the news suggesting that top US-China trade negotiators plan a call as soon as early next week. Further, news that Japan approved Gilead’s Remdesivir, a promising drug to combat the coronavirus (COVID-19), also added strength to the risk-on sentiment.

On the contrary, downbeat US Jobless Claims, 3,169K versus 3,000 expected, added weakness to the US dollar and offered additional strength to the pair. “Initial claims rose 3.17m, taking the total of jobless claims associated with COVID-19 to 33m. That’s nearly four times the number of jobs lost during the GFC,” said analysts at the Australia and New Zealand Banking Group (ANZ).

Other than downbeat data, which in turn raised worries ahead of today’s key US Nonfarm Payrolls (NFP), worrisome comments from the Fed policymakers also weigh the greenback.

Furthermore, market pricing for the negative Fed funds rate in 2021 offers some extra push to the market players off from the USD.

Amid all these catalysts, Wall Street closed in positive while the US 10-year Treasury yields dropped seven basis points (bps) to 0.64%.

Moving on, traders will keep eyes on the May month Statement of Monetary Policy (SOMP) for immediate direction. In the minutes of April meeting, the RBA Governor mentioned that he will outline potential economic scenarios in May SOMP, which makes the event key. Following the RBA SOMP, US NFP will lure the traders while virus/trade updates could keep offering intermediate moves.

Technical analysis

The pair’s strong bounce off 21-day SMA, currently around 0.6400, enables it to challenge the 100-day SMA level of 0.6545.