AUD/USD wavers around mid-0.7700s, China open, RBA’s Debelle eyed

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  • AUD/USD bulls attack upper-end of a normal trading range between 0.7820 and 0.7695-90.
  • Market sentiment recovered amid receding reflation fears, soft US data and little activity ahead of Friday’s US jobs report.
  • Fed policymakers rejected rate hike concerns, Aussie data came in mixed.
  • China markets open for the first time this week, US weekly Jobless Claims eyed as well.

AUD/USD remains choppy around 0.7740-50 during the early Thursday morning in Asia, after flashing a 0.52% daily gain the previous day. The US dollar’s pullback, on the back of mild risk-on mood, favored the Aussie pair’s bounce inside the typical 130-pip trading area observed since mid-April. However, a lack of fresh catalysts and cautious sentiment ahead of China’s first trading day of the week and the key data/events from abroad seem to test the pair’s upside momentum off-late.

Will China v/s US trouble the bulls?

In the last few days, policymakers from the West have criticized China and Russia for various reasons but a three-day off in Beijing restricted the dragon nation from a strong response that it generally gives. Hence, AUD/USD traders are waiting for how Xi Jinping and the company battle the broad moves against their policies and belief.

On the other hand, US ISM Services PMI and ADP Employment Change for April followed the suit of recent US economics that back market optimism despite easing from March’s stellar figures. While the outcomes doubt strong hopes from Friday’s US employment data, reflation fears are gradually easing, which in turn backs the risk-on mood and US Treasury yields. From Australia, second-tier PMIs and housing figures came in mixed.

It’s worth mentioning that US Treasury Secretary Janet Yellen’s U-turn on rate hikes precedes multiple Fed policymakers who rejected the idea of policy normalization at this stage. Some among them, like Boston Fed President Eric Rosengren, noted that significant slack remains in the economy, adding that inflation and inflation expectations look stable.

Elsewhere, the coronavirus (COVID-19) woes escalate in Canada and Japan but the vaccine optimism backs the bulls.

Amid these plays, Wall Street posted another mixed day with Nasdaq’s weakness battling mild gains of Dow Jones and S&P 500 while the US dollar index (DXY) eased.

Looking forward, China’s reaction, Japan’s open and risk catalysts will be the key for fresh impulse ahead of RBA Deputy Governor Guy Debelle’s speech around 09:00 AM GMT. However, the major market attention will be on Friday’s US Nonfarm Payrolls.

Technical analysis

Although the aforementioned 0.7820-0.7690 trading range can keep restricting short-term AUD/USD moves, a confluence of 50-day and 100-day SMA around 0.7710 becomes strong intermediate support to watch and also back the kiwi bulls.

 

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