AUD/USD regains 0.7450 as market sentiment improves despite mixed clues
- AUD/USD picks up bids to refresh intraday top, consolidate the heaviest daily fall in a fortnight.
- Australia is up for ending emergency support payments amid upbeat covid vaccine jabbing.
- Fed tapering concerns remain elevated, US reaches out to China for cutting oil imports from Iran.
- Evergrande coupon payment looms, Fedspeak, US debt limit/stimulus talks are in focus too.
AUD/USD licks its wounds around the intraday high of 0.7250, up 0.14% on a day, during early Wednesday. The Aussie pair dropped the most since September 14 the previous day but stayed inside the weekly range between 0.7220 and 0.7320.
While the risk-off mood weighed on the AUD/USD prices on Tuesday, the recently cautious optimism underpins the quote’s consolidation of late.
The positive news could be linked to the comments from Australia Treasurer Josh Frydenberg who cited firmer vaccinations to stop emergency aid payments. “The federal government has spent over A$9 billion ($6.5 billion) since June to support around 2 million people, but will phase out the payments as vaccination levels near targetted levels at 70%-80%,” said Frydenberg per Reuters.
Also positive for the mood could be US President Joe Biden’s canceled visit to Chicago to lead negotiations over his legislative agenda. The Democratic Leader is up for negotiating a deal with Republicans after the GOP turned down the bill to extend the debt ceiling and US Treasury Secretary Janet Yellen warned of empty pockets by October 18.
Additionally, China’s waiver of Intellectual Property (IP) for covid vaccine joins the risk-positive headlines.
On the contrary, St. Louis Federal Reserve President James Bullard backs Chairman Jerome Powell’s testimony to justify the central bank’s uttering of the word ‘taper’. Further, looming coupon payment of the Evergrande bonds and the US push to China, diplomatically, to cut oil imports from Iran challenge the risk-on mood.
It’s worth mentioning that uncertainty surrounding the US stimulus and debt ceiling extension joins the decision by the Japan government pension investment fund to not include yuan-denominated Chinese government bonds in its portfolio also weigh on the risk appetite.
Amid these plays, S&P 500 Futures print 0.45% gains snapping a two-day fall whereas the US 10-year Treasury yields remain on the front foot for the fifth consecutive day around the 10-month top near 1.55% at the latest.
Considering a lack of data/events in Asia, Fedspeak and the second-tier US housing numbers may entertain traders but headlines concerning stimulus, debt limits and China will be the key to follow for fresh impulse.
Technical analysis
AUD/USD rebounds from a one-month-old horizontal support line near 0.7220 within the 100-pip trading range established since September 20. However, the recovery moves will be less important below a convergence of the 50-DMA and 20-DMA, around 0.7320.