AUD/USD consolidates losses below 0.7400 on mixed Aussie trade numbers, covid jitters

• AUD/USD bounces off intraday low but remains lackluster.
• Australia trade surplus crosses previous readouts, forecasts but Export-Import details deteriorate for June.
• Australia records the highest daily infections since August, Texas reports the biggest one-day jump in cases since February.
• Fedspeak backs tapering, US NFP, qualitative factors eyed for clear direction.

AUD/USD bounces off intraday low to 0.7386, up 0.08% on a day, during early Thursday. Even so, the Aussie pair struggles to reverse the previous day’s fall amid mixed concerns.

It’s worth noting that the recently upbeat Aussie Trade Balance for June, 10496M versus 10450M expected and 9681M previous, triggered the quote’s recovery. However, softer-than-prior Exports and Imports, respectively near 4.0% and 1.0% versus 6.0% and 3.0%  in that order, challenge the bulls.

Read: Aussie June Trade Balance: Surplus A$+10,496 mln vs Reuters poll: A$+10,450 mln

In addition to the mixed data, AUD/USD pair also seems to struggle as the US Treasury yields remain firmer and so do the S&P 500 Futures. It’s worth noting that the stocks in Asia–Pacific lack clear direction as Australia’s ASX 200 drops 0.15% whereas Japan’s Nikkei 225 adds 0.30% by the press time.

Behind the moves is the traders’ indecision over the Fed’s next moves and the coronavirus fears, not to forget stimulus hopes and geopolitical fears. After Fed Vice Chair Richard Clarida renewed 2021 tapering concerns, Treasury Secretary Yellen said, per Bloomberg, “By the end of this year inflation will be running at a level consistent with the Fed’s target.” Following that, San Francisco Federal Reserve Bank President Mary Daly also flashed clues favoring the monetary policy tightening while speaking at the PBS Newshour interview. The Fed policymaker said, per Reuters, that her Modal outlook is that fed will be able to taper later this year or early next year.

In addition to the signals relating to the monetary policy adjustments, COVID-19 woes also underpin the US Treasury yields. That said, the latest updates suggest that Texas marks the biggest one-day increase in covid cases since early February whereas Japan reported all-time high daily infections on Wednesday. Further, Australia refreshes the highest daily infections since August 2020 while China’s recent virus figures were also grim.

Furthermore, the West versus China and Iran tussles seem to escalate of late, adding more strength to the US dollar’s safe-haven demand.

Alternatively, chatters that the US policymakers inch closer to further stimulus and there are no major challenges seen so far to the global economic recovery seem to put a floor under some of the equity gauges. It’s worth noting that the cautious sentiment ahead of the key US Nonfarm Payrolls also restricts the market moves and confuses AUD/USD traders.

Looking forward, risk catalysts remain as the key for predicting short-term AUD/USD moves ahead of the key US jobs report, up for publishing on Friday.

Technical analysis

Unless crossing a one-month-old horizontal resistance surrounding 0.7400–7410, also including 21-day SMA, odds of the AUD/USD pair’s drop back to an ascending support line from July 21, near 0.7345, can’t be ruled out.