- AUD/USD remains firmer at one-week high after rising in last two days.
- Stimulus news, Fed tapering concerns and softer US data dragged greenback.
- Gains of equities and commodities add to the bullish impulse.
- RBA’s Ellis, Aussie Q2 Construction Work Done and US Durable Goods Orders are the key data to watch.
AUD/USD remains on the front foot around the weekly top, following a two-day rebound from yearly low, as picking up bids around 0.7260 during the early Wednesday morning in Asia. The Aussie pair cheers the market’s optimism and the recently upbeat performance of equities, as well as commodities, to keep the buyers hopeful ahead of the week’s important data/events.
Softer US Richmond Fed Manufacturing Index data for August, 9 versus 25 expected, joins the first rise in the New Home Sales in four months to weigh on the push back the Fed’s tapering concerns as policymakers brace for Jackson Hole Symposium. The mixed data currently looks at the US Durable Goods Orders for July, forecast -0.3% versus +0.9% prior, for further firming up odds favoring the need for easy money policies.
Elsewhere, the US House of Representatives passed a $3.5 trillion budget and is progressing on the $1.2 trillion infrastructure plan, which in turn boosts the stimulus hopes.
On the other hand, a Senior Health Official from the US, Dr. Anthony Fauci, raised expectations that the US can get covid control by early next year if vaccinations ramp up. The latest move by the US Food and Drug Administration, full approval to the Pfizer-BioNTech vaccine, adds to the positives.
Even so, Reuters said, “The average number of deaths from COVID-19 has risen by 23% over the previous seven-day period, Dr. Rochelle Walensky, director of the U.S. Centers for Disease Control and Prevention (CDC), during a Tuesday press call.”
In Australia, the total infections ease and the most populous state New South Wales (NSW) registers the fastest pace of vaccinations in the world.
It’s worth observing that the recent softening of the US data pushes back the Fed’s tapering concerns and exerts downside pressure on the US Dollar, helping the equities, commodities and Antipodeans like AUD/USD in turn. However, traders remain cautious ahead of the annual speech of Fed Chair Jerome Powell at the Jackson Hole Symposium, on August 27.
That said, Wall Street benchmarks flashed another upbeat day while the US 10-year Treasury yields rose 4.2 basis points (bps) to 1.297% by the end of Tuesday’s North American session.
Looking forward, comments from RBA Assistant Governor (Economic) Luci Ellis and Australia’s Q2 Construction Work Done, market consensus 2.5% versus 2.4% previous readouts, will act as immediate catalysts wherein the AUD/USD trades will look for more positives. However, major attention will be paid to the sentiment-related factors and the US Durable Goods Orders.
Read: Durable Goods Orders Preview: The trigger for a greenback comeback?
Technical analysis
A daily closing beyond October 2020 tops near 0.7245 enable AUD/USD bulls to battle July’s low surrounding 0.7290. Also acting as the near-term key resistance is a downward sloping trend line from June 25, surrounding 0.7335. Meanwhile, the pair’s declines below 0.7245 may take a breather around October 26, 2020, swing high close to 0.7180 before dropping towards the yearly bottom of 0.7105.