AUD/USD rebound approaches 0.6700 on firmer sentiment, US data eyed

  • AUD/USD bounces off one-month low to pare recent losses, grinds near intraday high of late.
  • Market sentiment improves amid receding fears of recession, softer US data and more stimulus.
  • Downbeat  Aussie data probe buyers ahead of US CB Consumer Confidence.

AUD/USD picks up bids to 0.6690, as it portrays a recovery from the one-month low, marked the previous day, amid cautious optimism in the market during early Wednesday. In doing so, the Aussie pair pays little attention to the softer sentiment data at home.

That said, Australia’s Westpac Leading Index dropped to -0.1% in December compared to -0.05% prior readings. On Tuesday, the Reserve Bank of Australia (RBA) suggested, as per the latest monetary policy meeting minutes, that the economy is gradually improving and the policymakers discussed all options, including faster hikes.

On the other hand, the US Housing Starts declined by 0.5% MoM in November following October’s 2.1% contraction while Building Permits fell by 11.2% versus a 3.3% drop recorded in the previous month.

It’s worth noting that the US Dollar Index (DXY) dropped the most in a week the previous day, down 0.67% intraday to 103.95, as the greenback traders feared less Japanese bond-buying of the US Treasury bonds due to the BOJ action. It’s worth noting that Japan is the biggest holder of the US Treasury bonds and the latest move allows Tokyo to put more funds into the nation than letting it flow outside. That said, the 10-year counterpart rose more than the two-year ones and hence reduced the yield curve inversion that suggests the odds of the recession.

Elsewhere, hopes of China’s more investment, due to the World Bank’s cutting of growth forecasts for the dragon nation and the policymakers’ readiness to battle the recession fears, favored the market sentiment. On the same line could be the US Senate’s advancement of the $1.66 trillion government spending bill.

Against this backdrop, the US 10-year Treasury yields grind near a three-week high of 3.69% while the two-year bond coupons stay firmer around 4.26% by the press time. Further, Wall Street closed in green and allow stocks in the Asia-Pacific bloc to print mild gains of late.

Moving on, the US Conference Board (CB) Consumer Confidence figures for December, expected at 101.00 versus 100.00 prior, will join the headlines surrounding China to direct short-term AUD/USD moves.

Technical analysis

Although the 100-DMA restricts immediate AUD/USD downside near 0.6660, the support-turned-resistance line from November 21, around 0.6740, challenges the recovery moves.


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