“¢ Mixed Chinese inflation figures trigger the initial leg of long-unwinding trade on Thursday.
“¢ A modest uptick in the US bond yields underpins USD demand and added to the selling bias.
“¢ The USD recovery gets an additional boost from upbeat weekly jobless claims and hotter PPI.
The USD recovery picked up the pace in the last hour and dragged the AUD/USD pair to fresh session lows, further below mid-0.7100s.
The pair struggled to capitalize on the overnight bullish break through 100-day SMA barrier and witnessed some long-unwinding trade on Thursday. The initial leg of downtick was triggered by mixed Chinese inflation figures and was further aggravated by a modest US Dollar uptick.
With investors looking past the latest FOMC meeting minutes, reinforcing the US central bank’s patient stance, a goodish bounce in the US Treasury bond yields helped the USD to rebound from near two-week lows and eventually exerted some additional downward pressure on the major.
Adding to this, a weaker tone around commodity space – especially oil, copper and gold, further dented the already weaker sentiment surrounding commodity-linked currencies – like the Aussie and collaborated to the pair’s intraday slide of over 30-pips from six-week tops.
The positive tone surrounding the buck got an additional boost from upbeat US macro releases – hotter than expected US PPI print for March and an unexpected drop in the initial weekly jobless claims, which was seen as one of the key factors behind the latest leg of a sudden drop over the past hour or so.
It would now be interesting to see if the pair is able to find any support at lower levels or the current pullback marks the end of the recent corrective bounce as investors now look forward to speeches by influential FOMC member for in order to grab some meaningful trading opportunities.
Technical levels to watch
Any subsequent slide is likely to find some support near the 0.7125 region, which is closely followed by the 0.7100 round figure mark. On the flip side, the 0.7170-75 region now becomes immediate resistance, which if cleared might assist the pair to make an attempt to reclaiming the 0.7200 round figure mark.
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