AUD/USD wavers at three-week high past 0.7300, China’s return, US NFP eyed
- AUD/USD grinds higher after refreshing multi-day top, crossing 50-DMA.
- US debt ceiling extension hopes, improving Sino-American ties underpin risk-on mood.
- US Jobless Claims dropped to lowest in a month after strong ADP, backing firmer NFP.
- Fed tapering concerns highlight US jobs report, China to return after a week and Aussie FSR eyed as well.
AUD/USD remains sidelined following its run-up to the multi-day high of 0.7325, seesaws around 0.7310-15 during early Friday morning in Asia. While risk-on mood favored the bulls the previous day, cautious sentiment ahead of the key data/events probes the pair’s moves.
US Senate Republican Leader Mitch McConnell offered the much-needed push to the AUD/USD prices to cross the 50-DMA hurdle for the first time in over three weeks. The Republican support for, although not in full force, tames “empty pocket” fears as the US debt ceiling expires on October 01 and the stop-gap funding has little room as well.
Read: White House: US Pres. Biden looks forward to signing legislation to raise the debt limit
In addition to the US politics, headlines suggesting recently improving relations between Washington and Beijing also favor the risk-on mood, as well as the AUD/USD due to its risk-barometer status.
Alternatively, a monthly of the US Weekly Jobless Claims and reflation fears, as cited by the Cleveland Federal Reserve Bank President Loretta Mester, back the Fed tapering concerns and tame the pair buyers. On the same line, sluggish prints of Australia’s AiG Performance of Services Index for September, 45.7 versus 45.6 prior, also challenge the AUD/USD buyers.
Amid these plays, Wall Street benchmarks posted another positive day while the US 10-year Treasury yields were up 5.2 basis points (bps) to 1.576% by the end of Thursday’s North American session.
Although hopes from the US debt ceiling extension and the optimism linked to the US-China relations help AUD/USD buyers to remain hopeful, Republicans aren’t soft towards the Democratic proposal for debt ceiling hike and hence the voting on the key issue challenge the traders. Further, China is ready to return to the desks after a week-long holiday and may fuel volatility into the markets ahead of a likely pre-NFP trading lull.
Read: US September Nonfarm Payrolls Preview: Analyzing gold's reaction to NFP surprises
Technical analysis
Although a first daily closing beyond 50-DMA since September 13 and successful trading beyond 10-DMA so far during the week defend AUD/USD bulls, a sustained run-up past 0.7320 hurdle becomes necessary for further upside. Otherwise, pullback moves can retest the 10-DMA level near 0.7260. It should be noted that a clear run-up past 0.7320 enables the quote to aim for the two-month-old horizontal resistance area near 0.7415-20 whereas a downside break of 10-DMA may rest 0.7220 support.