Mildly bid near 0.7250 with eyes on Aussie National Cabinet

  • AUD/USD retreats from intraday high, stays around six-week top.
  • Market sentiment dwindles amid mixed messages, light calendar.
  • Record cases in Australia pushes PM Morrison to hold snap cabinet meeting.
  • US data, yields also eyed for clear direction, year-end inaction remains as a trading barrier.

AUD/USD bulls take a breather around multi-day top marked the previous day, up 0.10% near 0.7260 during the late Asian session on Thursday.

While the softer US dollar helped the Aussie pair buyers the previous day, fears emanating from the South African covid variant, namely Omicron, join geopolitical headlines to recently weighing on the quote.

Australia reports the record high daily covid infections, around 19,677 at the latest, despite cheering 90% vaccination status. The Pacific major previously announced an easing of activity restrictions among the state borders but is likely to recall some of the lockdown actions during today’s snap cabinet meeting.

Ahead of the meeting, the opposition party leader Anthony Albanese said, per ABC News, “The Prime Minister says he’s changing gears but truth is he’s stalled recovery. The truth is there’s so much uncertainty out there what we need out of today’s meeting is some clarity.”

Elsewhere, Reuters quotes US Secretary of State Antony Blinken said, “The US urges Chinese and Hong Kong authorities to release stand news staff members immediately.” Earlier in the day, Saudi Arabia’s King Salman bin Abdulaziz raised concerns over Iran’s lack of cooperation with the international community on its nuclear program and ballistic missile development.

It’s worth noting that the AUD/USD pairs cheered downbeat US dollar moves and softer US data the previous day. The US Dollar Index (DXY) poked monthly low on Wednesday amid a jump in the US Treasury yields that rallied the most in three weeks after the US seven-year Treasury bond auction showed disappointing demand for the government securities during the holiday period. Talking about data, the US Pending Home Sales for November dropped below the forecast of +0.5% to -2.2% MoM whereas Good Trade Balance hit a record deficit of $-97.8B versus $-83.2B prior.

Amid these plays, the US 10-year Treasury yields seesaw around 1.55% while the S&P 500 Futures print mild losses near 4,784. Further, Asia-Pacific stocks trade mixed to track their Wall Street counterparts.

That said, AUD/USD traders await words from Australia Prime Minister (PM) Scott Morrison for fresh impulse amid fears of fresh activity restrictions. In absence of this, the quote may extend the latest run-up.

Following that, the US Weekly Jobless Claims and Chicago Purchasing Managers’ Index for December, expected 205K and 62 versus 205K and 61.8 respectively, will decorate the calendar while risk catalysts will be important as well.

Technical analysis

A 50-SMA bullish cross over the 100-SMA joins firmer MACD and RSI conditions to keep AUD/USD buyers hopeful to overcome an upward sloping trend line from November 30, around 0.7270. Following that, the 78.6% Fibonacci retracement (Fibo.) level of November 15 to December 03 downside, around 0.7290, will be on focus.

On the contrary, a one-week-old horizontal support line restricts short-term AUD/USD downside around 0.7200, a break of which will aim for 50-SMA and 200-SMA, respectively near 0.7195 and 0.7175.


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