AUD/USD: Bulls seek extra push to stay around mid-0.7700s

• AUD/USD picks up bids inside a 10-pips trading range after refreshing weekly low.
• BOC-led risk-on mood recently favored the bulls that earlier paid a little heed to Aussie data.
• Australia’s NAB Business Confidence, Covid updates and news from China be the key but nothing more than the ECB.

AUD/USD buyers battle the top of the weekly trading range around 0.7750-60, near 0.7757 by the press time of early Thursday morning in Asia. The aussie pair dropped to the lowest in a week the previous day, mainly due to the coronavirus (COVID-19) woes, before recovering to refresh the highest levels since last Thursday. Although upbeat data at home couldn’t entertain the Aussie bulls earlier on Wednesday, the Bank of Canada’s (BOC) tapering mainly backed Antipodeans afterward.

Is BOC an early signal for Western central banks?

With the BOC’s 25% reduction in the weekly bond purchase, the Canadian central bank parts ways from the rest of its Western friends who are still talking easy money. The bold move collects a lot of applauds from risk-takers and propels commodity-linked currencies despite holding the benchmark interest rate unchanged at 0.25%.

Alternatively, the jump in the new covid infections, unfortunately, led by India, battles vaccine optimism amid talks over Israel’s purchase of booster jabs from Moderna and Johnson & Johnson vaccine updates likely to overcome recent challenges on its usage.

Against this backdrop, Wall Street benchmarks snap a two-day losing streak and the US dollar index (DXY) dropped back towards 91.00. However, the US 10-year Treasury yields remain mostly unchanged near 1.55% by the end of Wednesday’s North American session.

It should, however, be noted that the BOC’s moves are less likely to induce other major central banks like the Fed and the ECB even if the RBA may follow the clues in the distant future. The reason for the same could be traced from much-complicated mechanics of the Fed and the likes than the BOC to have the liberty to take this big move so swiftly. For the RBA, the policymakers are jostling over the employment figures and have recently backed the need for monetary easing despite an upbeat economic outlook.

Hence, the BOC-led risk-on mood may fade soon and could have negative consequences on AUD/USD prices.

Also on the risk-negative side are the latest chatters from China, backed by the Global Times, suggesting that Beijing will respond to Canberra’s repeal of the Belt and Road initiative. Furthermore, the covid conditions are also worsening in Asia and may exert downside pressure on the quote.

Even so, today’s Q1 2021 Business Confidence figures from the National Australia Bank (NAB), expected 7 versus 14, may test the bears should it offer a positive surprise. Also, the ECB and second-tier US data are expected to contribute to the market direction and must be watched closely.

Technical analysis

While 50-day SMA near 0.7720 keeps turning down the AUD/USD bears’ entries, upside momentum falters around 0.7750-60 since last Thursday. As a result, the pair’s moves between 0.7720 and 0.7760 become less important to follow.