- AUD/USD consolidates the biggest drop in three weeks.
- Australia’s Home Loans slumped to -0.6%, Investment Lending for Home eased to 2.1% in April.
- Strong early signals for US NFP put a lid under the tapering woes, backed by the reflation woes and Fed’s action.
- Receding covid cases at home battle virus variant fears and fiscal relief chatters.
AUD/USD remains inside a 20-pips trading range while licking the previous day’s wounds, up 0.08% around 0.7655 by the press time of early Friday. The Aussie pair dropped the most since mid-May after strong US data and the Federal Reserve (Fed) actions amplified tapering woes.
Recently weighing on the quote is the downbeat Australian housing data. Aussie Home Loans dropped 0.6% versus the previous jump of 3.3% whereas Investment Lending for Homes recedes to 2.1% growth compared to the prior rally of 12.7%.
It’s worth noting that a mixed play of the receding coronavirus (COVID-19) cases in Victoria, coupled with the fears of a covid strain, joins Aussie fiscal relief chatters exert downside pressure on the AUD/USD prices during the quiet session. Additionally, the market’s cautious mood ahead of the US Nonfarm Payrolls (NFP) and increasing odds of the Fed’s tapering, backed by strong early signals and recent trimming of a support measure used throughout the pandemic, also weigh on the AUD/USD, due to its risk barometer status.
Amid these plays, US 10-year Treasury yields wobble around 1.62% while S&P 500 Futures track Wall Street’s losses to drop 0.20% by the press time.
Given the lack of major catalysts and the pre-NFP anxiety, AUD/USD may remain sidelined. In addition to the US jobs report for May, Fed Chair Powell’s speech will also be the key event to follow for fresh impulse.
Technical analysis
AUD/USD remains vulnerable to test the 0.7535-30 support zone, comprising 200-day SMA and yearly bottom amid sustained downside break of 50-day SMA and a horizontal area around 0.7675. Also acting as an upside barrier is 50-day SMA near 0.7720.
