AUD/USD: Teases weekly top close to 0.7800 as the key day begins – Forex Crunch

  • AUD/USD holds gains around the recently flashed weekly high.
  • Risk appetite improves despite downbeat news from Fed’s Kaplan, China.
  • Vaccine hopes join receding reflation fears, upbeat data to keep bulls hopeful.
  • RBA Monetary Policy Statement, China trade data may entertain Asian traders but Nonfarm Payrolls (NFP) will be crucial.

After a volatile Thursday that initially showed a 50-pip drop, before refreshing the weekly high, AUD/USD stays firmer around 0.7785-80 amid the early Friday morning in Asia. Recovery in market sentiment could be spotted for the quote’s recent strength. However, a cautious mood ahead of the key data/events tests the bulls.

Too many catalysts to watch but NFP tops all…

Be it China’s response to global ire or its tussles with Australia, not to forget vaccine updates, stimulus news and data, Friday becomes a challenging day for the analysts due to multiple factors. However, the typical pre-NFP trading lull may take the center and save all.

During their first day of the week after long holidays, Beijing cut diplomatic trading dialogues with Australia and sent Aussie down to 0.7700 within a few minutes. However, the following news from America suggesting President Joe Biden’s support to waive IP protections for the coronavirus (COVID-19) vaccines helped restore the losses. Though, the US kept investment limits on China companies and tame the bulls afterward.

Also on the risk-negative side were comments from the Dallas Federal Reserve Bank President Robert Kaplan who reiterates support for tapering, but was ignored due to his non-voting-member status. Further, the Bank of England’s (QE) adjustments to the weekly bond purchases, despite keeping the total sum intact, also backed the reflation fears but were mostly ignored as most Fed members favored the need for easy money.

Talking about data, Australian activity and housing figures were mostly mixed but the early signal for today’s US Nonfarm Payrolls (NFP) for April flashed promising signals and helped the risk sentiment.

Amid all these plays, Wall Street ends Thursday’s trading with mild gains while the US 10-year Treasury yields dropped 1.4 basis points (bps) to retest 1.57% level. Further, the US dollar index (DXY) dropped the heaviest in over a week while gold crossed the $1,800 mark and backed the risk-on mood.

Looking forward, Australia’s AiG Performance of Services Index and RBA Monetary Policy Statement could offer immediate direction to AUD/USD ahead of China’s trade figures for April. Although scheduled catalysts in Asia may help AUD/USD to extend the latest upside, the typical pre-NFP sentiment could restrict the pair’s moves.

Technical analysis

A confluence of 50-day and 100-day SMA around 0.7705-10 backs the AUD/USD pair’s run-up towards 0.7820 horizontal resistance area.

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