After earning the week’s first daily gains, the AUD/USD remains in the lead.
Powell of the Federal Reserve drowned the US dollar with his denial of policy changes, while Australian data bolstered bullish impulsiveness.
Sydney has extended its local lockdown, and Victoria is bracing for one.
In June, Australia’s jobs report could be grim due to virus-related activity limits, and China’s GDP will be crucial as well.
Following the first winning day of the week, AUD/USD bulls take a breather at 0.7485 on early Thursday morning in Asia. The recent corrective fall in the Australian dollar might be connected to the US currency’s broad weakening, particularly owing to Fed Chair Jerome Powell’s testimony. However, the coronavirus (COVID-19) outbreak in Oz could have an impact on the important data, giving the bears optimism. The second-quarter GDP results from Australia’s greatest consumer, China, as well as other critical data from Beijing, are also crucial.
In his bi-annual testimony, Fed Chairman Powell stated that “a lot of notice” would be given before altering monetary policy. The central banker also indicated that the US economic recovery is still in its early stages, while maintaining a “temporary” inflation outlook. The US dollar index (DXY) fell to its lowest level in 18 days after his remarks, despite the fact that the US Producer Price Index (PPI) data for June continued to shout reflation fears.
In Australia, on the other hand, the Westpac Consumer Confidence Index rose from -5.2 percent in June to +1.5 percent in July. Furthermore, Australian Prime Minister Scott Morrison’s tailored assistance package for Greater China Even though New South Wales (NSW) extended lockdown for another two weeks, Sydney managed to appease bears. Local activity limitations are also predicted in Victoria as exposure locations expand. According to ABC News’ latest covid infection count, there were 108 new daily cases on July 14 compared to 100 on July 13.
It’s worth noting that Powell’s assurance of more cheap money boosted equities and gold, while also bolstering the US dollar’s weakness, which aided the AUD/USD recovery. However, US 10-year Treasury yields fell 6.6 basis points on Wednesday, marking the steepest decrease in a week, finishing at 1.35 percent.
In the next months, Australia’s June employment figures will likely bear the brunt of the country’s recent lockdowns, and the AUD/USD recovery will be tested. The front pages The employment change is predicted to decrease from 115.2K to 30K, while the unemployment rate is expected to increase to 5.5 percent from 5.1 percent. However, the bears may be beaten by China’s predicted robust Q2 GDP for QoQ, 1.2 percent vs 0.6 percent previously reported. Furthermore, China’s June Retail Sales and Industrial Production are expected to fall, putting pressure on the pair.
Read this article: Australian Employment Outlook: In the wake of recent lockdowns, a soft outcome is expected.
A clean upside break of the three-week-old resistance line near 0.7485-90, as MACD teases bulls after two months, might send the AUD/USD towards the 200-DMA level near 0.7585. Failure to do so, on the other hand, might leave sellers hoping for a new yearly bottom around the 0.7400 level./n
