- AUD/USD holds onto pullback from three-week top, remains pressured of late.
- Comments from Fed Vice Chair Clarida, US Treasury Secretary Yellen renew tapering woes, US dollar strength.
- Aussie infection ease but the return of local lockdowns in China and virus fears in the US weighs on sentiment.
- Aussie trade numbers eyed for immediate direction but risk catalysts, Fedspeak more important ahead of Friday’s NFP.
AUD/USD stays depressed around 0.7380, having dropped from the highest since mid-July, amid a quiet start to Thursday’s Asian session. In addition to a reversal of the previous two-day downtrend in covid infections at home, a firmer US dollar, mainly on tapering concerns, also dragged the Aussie pair to the south.
Australia’s daily virus cases jump back to 256, near to the yearly high flashed on August 01, after declining for the previous two days. On the other hand, covid infections also gained pace in the US and China where changes to the moratorium and local lockdowns challenged risk appetite, putting a safe-haven bid under the US dollar. Recently, the Wall Street Journal (WSJ) cited pressure on the official from the US Food and Drug Administration (FDA) towards escalating the speed of final approval for the Pfizer covid vaccine. On the same line, South China Morning Post (SCMP) cited the spread of the Delta covid variant in the Asian major.
Also weighing on the AUD/USD prices, actually having more importance, were the comments from the US Federal Reserve (Fed) Vice Chairman Richard Clarida and Treasury Secretary Janet Yellen. While the former raised hopes of tapering in 2021 and rate hikes by 2023, if core inflation hits 3% this year, Treasury Secretary Yellen said, per Bloomberg, “By the end of this year inflation will be running at a level consistent with the Fed’s target.”
These comments renewed US Treasury yields’ strength and the greenback while weighing on the Wall Street benchmarks of late.
It’s worth noting that the second-tier data, mainly the PMIs and Retail Sales, matched forecasts while the US ISM Services PMI’s jump was tamed by the disappointing ADP Employment Change.
Looking forward, AUD/USD traders will keep their eyes on the qualitative factors amid a lack of major data/events in Asia, only the Aussie Trade Balance for June. Following that, US Jobless Claims and comments from Fed officials will be important ahead of tomorrow’s US Nonfarm Payrolls (NFP). It’s worth mentioning that the return of the US dollar may keep disappointing the pair buyers unless any positive surprises erupt, which are less likely.
Technical analysis
The AUD/USD pair’s failure to provide a daily closing above a one-month-old horizontal resistance surrounding 0.7400–7410 directs the quote towards retesting an ascending support line from July 21, near 0.7345.
