- AUD/USD holds onto the choppy trading range following Aussie GDP data.
- Australia Q3 GDP came in better than expected on both QoQ and YoY.
- Market sentiment dwindles amid Omicron concerns, fears of faster Fed tapering.
- US ISM PMI, ADP Employment Change and Powell’s testimony 2.0 will decorate calendar, virus updates are crucial
AUD/USD eases to 0.7120, after an initial uptick to 0.7132 on better-than-forecast Australia Q3 GDP details during Wednesday’s Asian session. That said, the quote remains inside a small range after bouncing off the yearly low before a few hours.
Australia’s third-quarter (Q3) GDP rose past 3.0% YoY expectations to 3.9% while the QoQ figures contracted than the -2.7% market consensus to -1.9%. Earlier in the day, Australia’s Commonwealth Bank Manufacturing PMI jumped past 58.2 figure to 59.2 for November.
Read: Aussie GDP arrives and pushes AUD/USD up a notch
Ahead of the data, Goldman Sachs’ Andrew Boak said, “Australia is well positioned for recovery into the year-end and 2022.” Also positive for the quote were comments from China’s Vice Premier Liu He who expects strong 2021 GDP for the dragon nation.
Even so, the quote remains at the mercy of the risk catalysts amid mixed concerns over the South African strain for the coronavirus, dubbed as Omicron. Also challenging the risk barometer pair are the reflation fears and Fed rate hike woes emanating from comments from Federal Reserve (Fed) Chairman Jerome Powell could be termed as the key catalysts.
In his testimony on the CARES act before the Senate Banking Committee, Fed’s Powell suggested the risk of more persistent inflation and signaled favor for discussing faster taper in the December meeting.
On the other hand, Moderna’s Chief Stéphane Bancel weighed on the risk appetite earlier in Tuesday by citing, per the Financial Times (FT), the risk of less effectiveness of the existing vaccines to tackle Omicron and months before pharmaceutical companies can manufacture new variant-specific jabs at scale. However, representatives of Pfizer and Oxford tried placating market fears citing no such evidence supporting the fact that the current jab will not be able to contain the virus strain.
Talking about data, the US CB Consumer Confidence dropped to a nine-month low and housing numbers also came in softer, which in turn joins recently positive data from Australia to offer an intermediate relief to the AUD/USD.
Other than the data, the bounce in the US Treasury yields from a two-month low and mildly positive stock futures also underpin the pair’s recovery moves.
Moving on, covid updates and the Fedspeak will be more important for AUD/USD traders while US ISM PMI and ADP Employment Change, as well as China Caixin Manufacturing PMI, will also offer additional details to watch for clear direction.
Technical analysis
AUD/USD holds onto corrective pullback from yearly low inside one-month-old bearish trend channel, staying below an ascending trend line established since November 2020.
Although oversold RSI conditions triggered the much-awaited bounce, bearish MACD signals and downward sloping channel keeps sellers hopeful to revisit the yearly low near 0.7062. That said, the 0.7210 hurdle, including the stated channel’s upper line and 78.6% Fibonacci retracement (Fibo.) of November 2020 to February 2021 upside, acts as the near-term key hurdle. It’s worth noting that the 11-month-old support-turned-resistance line around 0.7145 guards the quote’s immediate upside.