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- AUD/USD holds upper ground after posting the week’s first daily gains.
- Fed’s Powell drowned US dollar with rejection to policy adjustments, Aussie data added to bullish impulsive.
- Sydney extends local lockdown, Victoria feared for one.
- Aussie jobs report could be bleak in June amid virus-led activity restrictions, China GDP will be the key as well.
AUD/USD bulls take a breather around 0.7485, following the first positive day of the week, amid early Thursday morning in Asia. The US dollar’s broad weakness, mainly due to Fed Chair Jerome Powell’s testimony, could be traced to the Aussie pair’s latest corrective pullback. However, the coronavirus (COVID-19) woes in the Oz nation could weigh on the key data, keeping the bears hopeful. Also important are the second-quarter GDP figures from Australia’s largest customer China, together with other key data from Beijing.
Powell put worked…
Fed’s Powell mentioned that a “lots of notice” would be given before adjusting the monetary policy in his bi-annual testimony. The central banker also signaled that the US economic recovery is still in its nascent stage while repeating a “transitory” outlook for inflation. Following his comments, the US dollar index (DXY) marked the heaviest losses in 18 days even as the US Producer Price Index (PPI) data for June kept screaming for reflation fears.
On the other hand, Australia’s Westpac Consumer Confidence came in better than -5.2% previous readouts to +1.5% in July. Further, Aussie PM Scott Morrison’s tailor-made relief package for Greater Sydney also placated bears even as New South Wales (NSW) extends lockdown for another two weeks. Additionally, Victoria is feared for local activity restrictions as exposure sites grow. As per the latest covid infection count per ABC News, the new daily cases were 108 for July 14 versus 100 on July 13.
It’s worth noting that Powell’s assurance of further easy money helped equities and gold also cheered the US dollar weakness, which in turn offered extra strength to the AUD/USD recovery. That said, US 10-year Treasury yields dropped 6.6 basis points, marking the heaviest slump in a week, closing Wednesday’s books around 1.35%.
Looking forward, Australia’s June month employment data are likely to bear the burden of the latest local lockdowns and may probe the AUD/USD recovery moves. The headlines Employment Change is expected to ease from 115.2K to 30K whereas Unemployment Rate could rise to 5.5% versus 5.1% prior. However, expectedly strong China Q2 GDP for QoQ, 1.2% versus 0.6% previous readouts may battle the bears. Furthermore, China’s Retail Sales and Industrial Production for June are likely to ease and can keep the pair pressured.
Read: Australian Employment Preview: Soft outcome anticipated amid recent lockdowns
Technical analysis
As MACD teases bulls after two months, a clear upside break of the three-week-old resistance line near 0.7485-90 could propel the AUD/USD towards the 200-DMA level near 0.7585. However, failures to do so could keep sellers hopeful to witness a fresh yearly low around the 0.7400 threshold.