The AUD/USD pair was grinding higher close to 0.6890 while it was fighting hard to keep its rebound in the early Asian session from a low point of 23 months as traders wait for Friday’s bell. The latest pullback of the pair might be linked with the bounce off of the US Dollar from its intraday low. Also, news from China and Australia have their respective roles to play.
AUD/USD price chart. Source TradingView
The US Dollar index went band-forth through the daily bottom close to 104.60 in the midst of the pause of the US Treasury yield and equity market after the first set of run-ups. The latest move of the US Dollar might be connected with fears in the market before the publication of the Michigan consumer sentiment report for the month of May. It is expected to deliver a figure of 64 against the prior figure of 65.2.
Chinese Government policies favor the Pair
It should be noted that the push by the Chinese government to generate more employment for college students equally favored bullish traders of the AUD/USD pair. Ditto for the hopes that the country will have no COVID cases, especially in the city of Shanghai. In the same bucket stays the order for residents to stay at home for a period of three days so they can be tested for COVID and tame the virus effectively.
Nevertheless, news about Taiwan and the most recent warnings from the Defense Minister of Australia curtailed optimism in the Asian market. The US Dollar index’s recovery might as well be linked to the delayed package from the US to Ukraine as a result of an objection from Senator Rand Paul.
Much more, the fears that inflation is going to be a major threat to economies globally gave more support to the US Dollar’s safe-haven position.
But then, statements of caution from the Federal Reserve’s Chairman, Jerome Powell, and the President of San Francisco Federal Reserve, Mary Daly, adds to anxieties before the data. It further puts the US Dollar under pressure and boosts buyers of the AUD/USD pair.
While showing the market’s mood, the ten-year US Treasury bond yield shows a pullback of correction following renewed lows of two weeks on Thursday. The new low was around 2.89%, whereas the S&P 500 futures rose by 1.0% but it was also close to a year’s low.
The data and risk catalysts from the US as they relate to Russia and China would be so significant for traders of the AUD/USD pair to watch out for.