- AUD / USD continues to move higher on Friday amid a sustained selling bias around the US dollar.
- The pair’s bulls ignore dismal Australian retail sales data and China services PMI.
- The market is focused on the United States monthly NFP jobs report.
The pair AUD/USD has broken out of its intraday consolidation range and has spiked near month-long highs, around the 0.7435 region at the start of the European session on Friday.
The pair has extended its recent strong bullish move and continued gaining traction for the fourth day in a row on Friday. This marks the fifth day of positive movement in the previous six (also the eighth in the previous nine) and is due solely because of a broad weakness of the US dollar.
Investors seem convinced the Fed will wait a longer period before reversing its massive stimulus from the pandemic era. Aside from this, diminishing hopes for an early tightening dragged the benchmark 10-year US government bond yield below the 1.30% level, weighing on the USD.
Apart of this, the underlying bullish sentiment in financial markets it has further weighed on the demand for the safe haven US dollar and benefited the higher perceived risk Australian dollar. The combination of supporting factors has helped offset weaker Australian and Chinese economic data published early this Friday.
The Australian Bureau of Statistics reported a larger drop than anticipated in retail sales during July amid COVID-induced lockdowns in major cities across the country. Secondly, China’s Caixin Services PMI showed activity in the country’s services sector contracted strongly in August.
With the price dynamics around the USD proving to be a unique boost from the momentum of the AUD / USD pair, the market will focus on the release of monthly US employment data on Friday. The popularly known NFP report could sway expectations about the likely timing of the Fed’s downsizing plans. This, in turn, will play a key role in USD price action in the near term and provide fresh momentum. directional to AUD / USD.
Technical levels to observe
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