- A combination of factors does not help AUD / USD capitalize on the positive move after the NFP.
- A modest rally in US bond yields helps reignite demand for the USD and limits the pair’s rally.
- Disappointing Chinese trade data and softer risk sentiment act as a headwind for the Aussie.
The pair AUD/USD is extending its side consolidation price action during the European session on Monday and remains trapped within a narrow range around the 0.7750 level.
The pair has struggled to capitalize on Friday’s strong positive move of nearly 100 pips and has witnessed moderate movements within a range on the first day of a new trading week. As investors looked beyond the weakest monthly US employment report, the US dollar has found some support in a modest rally in US Treasury yields. This, in turn, has been seen as a key factor that has limited any significant rally for the AUD / USD pair.
It is worth remembering that the NFP showed that the US economy added 559,000 new jobs in May compared to the 650,000 expected. The data expectations that the Fed will tighten monetary policy sooner rather than later. That said, concerns about rising inflationary pressure have acted as a tailwind for US bond yields ahead of the release this week of the latest US consumer CPI inflation figures on Thursday.
Apart of this, Mixed Chinese trade balance data and a softer tone around US equity futures have prevented investors from opening aggressive bullish positions around the Australian dollar, e higher perceived risk. In USD terms, China’s trade surplus fell to $ 45.53 billion in May from the previous 50.5 billion, while both imports and exports fell short of market estimates. This has been seen as another factor that has limited the gains of the AUD / USD pair.
There is no major economic data release from the US on Monday. Therefore, overall market risk sentiment and US bond yields will continue to play a key role in influencing USD price dynamics. This, in turn, could build some momentum to the AUD / USD pair and allow investors to seize some short-term opportunities.
AUD / USD technical levels
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