- AUD/USD takes a U-turn from intraday high, stays mildly bid around six-week high.
- US President Biden confirmed earlier rumors of banning US airspace for Russian flights.
- Firmer Australia Q4 GDP, market consolidation helped buyers earlier.
- US ADP, Fed Chair Powell’s Testimony will decorate calendar, risk catalysts are the key.
AUD/USD bulls face rejections near intraday high as risk appetite fades early Asian session optimism after the US President Joe Biden’s first State of the Union (SOTU) during Wednesday.
The reason could be linked to the banning of Russian flights from entering the US airspace, due to Moscow’s invasion of Kyiv. However, his comments over “self-reliance” seem to have kept the market hopeful of economic recovery and gained him cheers from the audience.
Read: US President Biden’s SOTU: Announcing a ban on Russian flights from using US airspace
As US President Biden continues to speak, the latest statements have been positive for sentiment as they suggest a plan to battle inflation.
Read: US President Biden on inflation: Instead of relying on foreign supply chains, let’s make it in America
Earlier in the day, Australia’s fourth quarter (Q4) GDP joined mild risk-on mood to help the AUD/USD pair consolidate the previous day’s losses. That said, Australia’s fourth quarter (Q4) GDP rose past 3.0% forecasts and -1.9% prior to 3.4% QoQ. Further, the YoY number rallied to 4.2% versus 3.7% expected and 3.9% previous readouts.
The improvement in the market sentiment, as reflected by the upbeat US Treasury yields and S&P 500 Futures, seemed to have ignored the risk-negative headlines concerning the Russia-Ukraine crisis.
It’s worth noting that the International Monetary Fund (IMF) and World Bank (WB) mentioned, “War in Ukraine creating significant spillover effects in other countries, commodity prices rising, risk driving further fueling inflation.” On the same line were comments from US Treasury Secretary Janet Yellen who denounces in strongest, per Reuters, Russia's illegal, brutal invasion of Ukraine.
Against this backdrop, the US 10-year Treasury yields hold onto the early Asian session’s bullion consolidation around 1.75%, up four basis points (bps) at the latest. However, the S&P 500 Futures fades the initial mild gains by the press time, up 0.10% intraday around 4,310.
Moving on, Fed Chair Jerome Powell’s bi-annual testimony and the US ADP Employment Change for February will be important data/events to watch for fresh impulse. However, headlines concerning Ukraine and Russia will be major directives.
Read: US ADP February Preview: Private job creation returns
Technical analysis
The AUD/USD pair’s ability to provide a daily closing beyond the 100-DMA level of 0.7235 enables it to challenge January’s high of 0.7315.
