- AUD/USD picks up bids to refresh intraday high and extend the previous day’s bounce off the weekly top.
- Australia’s Trade Balance improved in June even as Exports and Imports eased.
- Mixed sentiment and a softer US dollar strengthen the recovery moves.
- Second-tier US data, risk catalysts will be important for fresh impulse.
AUD/USD remains on the front foot for the second consecutive day, refreshing intraday high near 0.6965. In doing so, the Aussie pair justifies firmer Trade Balance data from the Australian Bureau of Statistics while cheering a softer US dollar amid a sluggish Asian session on Thursday.
That said, Australia’s Trade Balance rose to 17,670M in June, well beyond the 14,000M forecast and 15,965M prior. However, Imports and Exports eased to 0.7% and 5.1% during the stated month versus respective priors of 5.8% and 9.5%.
It should be noted that Bloomberg’s news suggesting a lack of support for the US-Taiwan ties also seems to help the AUD/USD prices. The reason could be linked to the Democratic Party members’ ability to stop the US policymakers from mingling more with Taiwan which China doesn’t like, the same could help the market sentiment and the Aussie pair. “The Biden administration is lobbying Democratic senators to put the brakes on a bill that would alter US policy toward Taiwan, including by designating it as a major non-NATO ally, according to people familiar with the matter,” stated the news.
Elsewhere, mixed US data and Fedspeak also appeared to have weighed on the US dollar. That said, the US Dollar Index (DXY) remains indecisive around 106.35 after refreshing the weekly top with 106.82 earlier on Wednesday.
On Wednesday, the US ISM Services PMI for July rose to 56.7 from 55.3 prior and the market expectation of 53.5 whereas the final reading of the US S&P Global Services PMI for July dropped to 47.3, marking the first contraction in two years, from 52.7 in June and the flash estimate of 47. Elsewhere, China’s Caixin Services PMI for July also surprised markets with upbeat data.
Talking about the Fedspeak, St. Louis Federal Reserve Bank President James Bullard said, “(There is) still some ways to go to get to a restrictive monetary policy." The policymaker adds that he still wants to get to 3.75 to 4% this year while showing a preference for the type of frontloading. Other than Fed’s Bullard, Fed Minneapolis President Neel Kashkari and Richmond Fed President Thomas Barkin also joined the league of the Fed hawks to exert downside pressure. However, San Francisco Fed President Mary Daly appeared to have flashed mixed signals and tamed the DXY bulls afterward. The policymaker said, "Markets are ahead of themselves in expecting rate cuts next year."
Against this backdrop, market sentiment remains sluggish after portraying the previous day's optimism. While signaling the mood, the S&P 500 Futures remain directionless near 4,150, and the US 10-year Treasury yields remain pressured at around 2.71%, down three basis points (bps) by the press time.
Looking forward, Germany’s Factory Orders for June will precede the US Good and Services Trade Balance for June, expected $-80.1B versus $-85.5B prior, as well as the weekly Initial Jobless Claims, expected 259K versus 256K prior, to decorate the calendar. However, major attention will be given to the comments from the ECB and the Fed policymakers, as well as the Sino-American tension over Taiwan for clear directions ahead of Friday’s US NFP.
Technical analysis
A clear upside break of the support-turned-resistance line from July 14, around 0.7000 by the press time, becomes necessary for the AUD/USD buyers’ conviction. Failing to get this level can recall sellers targeting the 21-DMA support surrounding 0.6890.
Information on these pages contains forward-looking statements that involve risks and uncertainties. Markets and instruments profiled on this page are for informational purposes only and should not in any way come across as a recommendation to buy or sell in these assets. You should do your own thorough research before making any investment decisions. FXStreet does not in any way guarantee that this information is free from mistakes, errors, or material misstatements. It also does not guarantee that this information is of a timely nature. Investing in Open Markets involves a great deal of risk, including the loss of all or a portion of your investment, as well as emotional distress. All risks, losses and costs associated with investing, including total loss of principal, are your responsibility. The views and opinions expressed in this article are those of the authors and do not necessarily reflect the official policy or position of FXStreet nor its advertisers. The author will not be held responsible for information that is found at the end of links posted on this page.
If not otherwise explicitly mentioned in the body of the article, at the time of writing, the author has no position in any stock mentioned in this article and no business relationship with any company mentioned. The author has not received compensation for writing this article, other than from FXStreet.
FXStreet and the author do not provide personalized recommendations. The author makes no representations as to the accuracy, completeness, or suitability of this information. FXStreet and the author will not be liable for any errors, omissions or any losses, injuries or damages arising from this information and its display or use. Errors and omissions excepted.
The author and FXStreet are not registered investment advisors and nothing in this article is intended to be investment advice.
Recommended content
Editors’ Picks
GBP/USD edges higher amid subdued USD demand, remains below mid-1.2700s ahead of UK GDP
![GBP/USD edges higher amid subdued USD demand, remains below mid-1.2700s ahead of UK GDP](https://editorial.fxstreet.com/images/Markets/Currencies/Majors/GBPUSD/iStock-1078115946_XtraSmall.jpg)
GBP/USD regains positive traction following the previous day’s post-US CPI decline. Dovish Fed expectations and a positive risk tone weigh on the USD and lend support. Traders now look to the UK GDP print for some impetus ahead of the US macro data.
EUR/USD holds steady above 1.1000 ahead of US Retail Sales data
![EUR/USD holds steady above 1.1000 ahead of US Retail Sales data](https://editorial.fxstreet.com/images/Markets/Currencies/Majors/EURUSD/money-13797882_XtraSmall.jpg)
The EUR/USD pair consolidates its gains near 1.1010 after retracing from the fresh seven-month top during the early European session on Thursday. The Eurozone Gross Domestic Product growth figure for the Q2 printed exactly as expected, which lifted the Euro against the Greenback.
Gold: $2,470 appears a tough nut to crack for buyers
![Gold: $2,470 appears a tough nut to crack for buyers](https://editorial.fxstreet.com/images/Markets/Currencies/Crosses/XAUUSD/gold-bar-32668024_XtraSmall.jpg)
Gold price has managed to find its feet above the $2,450 psychological level, looking once again to challenge the $2,470 key resistance in the lead-up to the US Retail Sales and Jobless Claims data releases.
Ethereum price is poised for a decline as on-chain data shows negative bias
![Ethereum price is poised for a decline as on-chain data shows negative bias](https://editorial.fxstreet.com/images/Markets/Currencies/Cryptocurrencies/Coins/Ethereum/ethereum_XtraSmall.jpg)
Ethereum's price is set for a downturn as it approaches its key resistance area of around $2,843. On-chain data further supports a bearish outlook, highlighted by a positive spike in Ethereum's Exchange Flow Balance and a decline in development activity.
Feeding off a diet of calming disinflation
![Feeding off a diet of calming disinflation](https://editorial.fxstreet.com/images/Macroeconomics/EconomicIndicator/EconomicHealth/GDP/Growth/businessman-is-stacking-coins-gm183865137-16478170_XtraSmall.jpg)
As the sun rises over Asia, the markets calmly grab the baton from a relatively serene US scene. The current buzz isn't about whether the Fed will trim rates at its spotlight-stealing September 17-18 gathering but how deep they'll dig into the cuts.