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  • Retreating US bond yields undermined the USD and assisted AUD/USD to regain traction on Thursday.
  • Sliding commodity prices, a sharp fall in the equity markets capped gains for the perceived riskier aussie.
  • A sustained break below the 0.7715-10 area (weekly lows) is needed to confirm a bearish breakdown.  

The AUD/USD pair trimmed a part of its intraday gains and was last seen hovering around the 0.7735-40 region, still up over 0.15% for the day.

As investors looked past hawkish FOMC minutes, a modest pullback in the US Treasury bond yields failed to assist the US dollar to capitalize on the previous day’s bounce from multi-month lows. This, in turn, was seen as a key factor that provided a modest intraday lift to the AUD/USD pair.

Bulls further took cues from a surprise dip in the Australian unemployment rate to 5.5% in April. Meanwhile, the number of employed people unexpectedly dropped by 30.6K, though the disappointment was offset by an upward revision of the previous month’s reading to +77K from 70.7K.

The uptick, however, lacked any strong follow-through, instead ran out of steam near the 0.7765 region amid the ongoing decline in commodity prices. This, along with a sharp fall in the US equity futures, collaborated towards capping gains for the perceived riskier Australian dollar.

Despite the negative factors, the AUD/USD pair, so far, has managed to hold in the positive territory above the weekly lows, around the 0.7710 region touched in the previous session. This makes it prudent to wait for sustained weakness below the mentioned level before placing any bearish bets.

Market participants now look forward to the US economic docket – featuring the release of the Philly Fed Manufacturing Index and Initial Weekly Jobless Claims. Apart from this, the US bond yields and the broader market risk sentiment will influence the USD and provide some impetus to the AUD/USD pair.

Technical levels to watch


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