AUD / USD looking for a move above the 0.7300 level

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  • A combination of supporting factors helps AUD / USD gain traction on Friday.
  • Upbeat Australian retail sales data provide a modest rally for the Australian dollar.
  • Pessimistic expectations from the Fed continue to weigh on the USD and support the rise in the pair.

The pair AUD/USD moves higher during the European session on Friday, with the bulls looking for a sustained move above the 0.7300 level. At the time of writing, the pair remains close to the daily highs around the 0.7290 / 95 region.

After an initial drop to the 0.7265 region, the pair has managed to regain some positive traction on the last trading day of the week and has extended the recovery from the four-day lows hit the previous day. The rally has been supported by a combination of factors, such as upbeat Australian macroeconomic data and a weaker tone around the US dollar.

Preliminary data released this Friday has shown that Australian retail sales recovered 1.6% in October after a fall in September and August. The reading has far exceeded expectations for a modest 0.3% growth and bolstered hopes for a broader economic recovery in the current quarter, which in turn has provided a modest boost to the Australian dollar.

On the other hand, the us dollar is under pressure by the decision of the Secretary of the Treasury of the United States, Steven Mnuchin, to end the pandemic relief for companies in difficulty. This occurs in the midst of Concerns about the economic consequences of the imposition of new restrictions due to COVID-19 in several US states and the Fed’s speculation about additional monetary easing.

The pessimistic expectations of the Fed were evident in the wake of the current drop in US Treasury yields, which have weighed on the US dollar and they have continued to support the modest rally in the AUD / USD pair. That said, softer risk sentiment, as shown by a further downturn in US equity futures, could limit gains from the perceived riskier Australian dollar.

In the absence of major economic releases from the US, AUD / USD remains at the mercy of USD price dynamics. This, along with the broader market risk sentiment and developments around the coronavirus saga, should help investors seize some significant opportunities.

 

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