- AUD/USD consolidates intraday losses near the monthly bottom.
- China CPI MoM, PPI YoY cross the market consensus and prior readings in July.
- DXY trims NFP-led gains near multi-day top amid stimulus, covid jitters.
- Qualitative catalysts remain the key factors to watch as bears keep the reins.
AUD/USD extends rebound from monthly low to 0.7346 but stays down by 0.13% intraday amid Monday’s Asian session. The Aussie pair’s latest corrective pullback could be traced to the upbeat China inflation data and qualitative headlines. However, the broad US dollar strength keeps the pair bears hopeful.
China’s headline Consumer Price Index (CPI) MoM rose past +0.2% market consensus and -0.4% prior to +0.3% in July whereas the Producer Price Index (PPI) crossed 8.8% YoY forecast and prior level to 9.0%.
Read: China’s CPI beats estimates with 1.0% YoY in July, AUD/USD tests 0.7350
In addition to the upbeat data from Australia’s largest customer, covid updates from Australia and progress over US stimulus also favor the AUD/USD pair’s latest consolidation. As per the recent updates, the $1.0 trillion stimulus is up for final passage from the Senate, which might be Tuesday. However, the House of Representatives will need to asset the bill before it reaches President Biden for a sign.
On the other hand, Australian State Victoria’s Premier Daniel Andrews recently announced that the region will exit the virus-led lockdown from midnight but activity restrictions will remain the same in Melbourne for now. It’s worth noting that the national figures have eased during the weekend from Friday’s 363, the highest since mid-August 2020, to recently around 290.
While talking about the US infections, Reuters said, “New daily coronavirus cases in the United States have hit a six-month high, with the seven-day average reaching nearly 95,000. That rate is five times higher than it was less than a month ago.”
It should be noted, however, that the market sentiment remains sluggish, favoring the AUD/USD bears, of late as the Fed’s rate hike and tapering concerns gain momentum after Friday’s strong US jobs report.
The US Dollar Index (DXY) rose the most in 18 days on Friday, up 0.03% around the highest since July 26 by the press time. While the greenback strength weighs on the AUD/USD prices, downbeat prints of S&P 500 Futures and the US 10-year Treasury yields also weigh on the quote.
Looking forward, a light calendar will keep AUD/USD pair traders directed towards the risk catalysts for fresh direction. Among them, virus updates and stimulus news will be crucial to follow.
Technical analysis
A clear downside break of a 13-day-old support line, now resistance, directs AUD/USD towards the yearly low of 0.7288. Even if the quote crosses the 0.7355 immediate hurdle, a one-month-old horizontal resistance near 0.7400–7410 will be the key to challenge bulls.
