AUD/USD consolidates from fresh yearly high, 0.7300 in focus
- AUD/USD seesaws in a choppy range around 0.7250 after refreshing the highest levels since January 2019.
- Fed Chair Powell’s speech boosts the market’s risk appetite.
- Chatters surrounding the US stimulus deadlock offer intermediate moves.
- No major data at home, Jackson Hole updates, US statistics will be the key.
AUD/USD trades near 0.7260 at the start of Friday’s Asian session. The aussie pair earlier refreshed the 19-month high, before stepping back from 0.7290, while flashing a four-day winning streak. While the early-Thursday data from Australia, namely Private Capital Expenditure (Q2), was better than forecast, it was the Federal Reserve Chairman Jerome Powell’s speech in the Jackson Hole Symposium that stole the show. Also recently extending the risk-on sentiment are concerns that the US coronavirus (COVID-19) relief talks may resume soon.
Market’s cheer Powell’s power-play…
Although the 2.0% Average Inflation Target (AIT) method was well anticipated, market players had their doubts over Powell’s economic outlook. However, the mentioning of “broad-based and inclusive goal” of maximum employment suggested the easy money is likely to stay for many years, as anticipated by the US central banker.
On the contrary, the US-China tussle continues following China’s missile show at the South China Sea military drill. The latest developments come from TikTok, a Chinese company, where the CEO, Kevin Mayer, stepped out amid intense American pressure to divest.
Elsewhere, the on-and-off concerning the US COVID-19 relief package also offers mixed clues to the markets. Following the initial reports that the talks between House Speaker Nancy Pelosi and White House Chief of Staff Mark Meadows didn’t go well, the opposition member Pelosi came out by saying, “Democrats are willing "to meet in the middle" with a $2.2 trillion bill.
Against this backdrop, the US 10-year Treasury yields surge 6.7 basis points (bps) to 0.754% whereas Wall Street closed mixed following the initial rally by the DJIA and S&P 500.
Looking forward, traders will keep eyes on the risk catalysts, namely the US stimulus updates, Sino-American tussle and comments from the Jackson Hole, for immediate direction amid a light calendar in Asia. During the US session, Chicago Purchasing Managers’ Index, Michigan Consumer Sentiment and Personal Spending-Consumption details will decorate the calendar.
Technical analysis
An upward sloping trend line from August 05 joins the year 2019 top to highlight 0.7300 as the tough upside barrier. Though, any downside above a two-week-old support line, at 0.7254 now, can be considered ephemeral.