- AUD/USD stays firm after posting the heaviest gains in over a week.
- Risk-appetite improved as US data flash strong signals, vaccinations are high and Biden pushes for $2.25 trillion infrastructure spending.
- Off in Australia warranted bull’s caution but risk-on mood dominated.
- ANZ Job Advertisements, RBA and China Caixin Services PMI become the key.
AUD/USD consolidates recent gains in a choppy range between 0.7645 and 0.7660, around 0.7651 by the press time, as Aussie traders return to their desks after a long weekend on Tuesday. Markets were positive as strong US economics on both sides of recent holidays, namely Friday and Monday, join the faster pace of vaccinations in the West and US President Joe Biden’s hints to use special powers to push his $2.25 trillion infrastructure spending plan through the senate.
The bulls are back but RBA will be crucial…
Be it a whooping 916K US Nonfarm Payrolls or the stronger ISM Manufacturing PMI since 1983, not to forget record high ISM Services PMI, the world’s largest economy has a perfect blend of economics to lure the market optimists. Also on the positive side were the Biden administration’s push for early jabbing and successful results, as well as the UK’s record immunizations and unlocks. Furthermore, US President Biden’s readiness to push for more stimulus also offers a warm welcome to the Australian traders after being on holiday since Thursday.
At home, no community transmission in Queensland and the government’s signals to ease activity restrictions from New South Wales (NSW) provide an extra reason for the Aussie buyers to remain hopeful.
On the contrary, jump in the coronavirus (COVID-19) infections in China and India joins the UK’s cautious response to the international travel plans to cap the market sentiment.
Against this backdrop, S&P 500 refresh record top above 4,000, with DJI30 and Nasdaq, also being strong, but the US 10-year Treasury yield drops 1.6 basis points (bps) to 1.70% by the time of writing.
Looking forward, Australia’s ANZ Job Advertisements for March, prior 7.2%, will precede China’s Caixin Services PMI for the said month, market consensus 51.7 versus 51.5 previous readouts, will be the key for AUD/USD traders. Although the recent dwindling in Beijing’s Caixin Manufacturing PMI raises doubts of China data and may test AUD/USD bulls, major attention will be given to the Reserve Bank of Australia’s (RBA) monetary policy meeting.
Although the Aussie central bank isn’t expected to alter the current monetary policy, with rates near the record low of 0.10%, comments over the recent yields moves and employment markets will be the key to watch.
Read: Reserve Bank of Australia Preview: Optimistic but on hold
Technical analysis
A daily closing beyond 100-day SMA, around 0.7640, enables AUD/USD buyers to keep their eyes on the mid-March low surrounding the 0.7700 threshold.
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