AUD/USD bulls flirt with weekly high, above mid-0.7100s on dismal US ADP report
- The prevalent USD selling bias pushed AUD/USD higher for the third straight day.
- The disappointing US ADP report did little to provide any respite to the USD bulls.
- The RBA’s dovish stance seemed to be the only factor capping gains for the major.
The AUD/USD pair maintained its bid tone through the early European session and held steady near the weekly high, just above mid-0.7100s post-US ADP report.
Automatic Data Processing (ADP) reported this Wednesday that the US private-sector employment declined by 301K in January as against market expectations for an addition of 207K jobs and the 807K previous. The awful data exerted additional pressure on the already weaker US dollar, which continues to be weighed down by less hawkish comments by Fed officials.
In fact, St. Louis Fed President James Bullard (a noted hawk) and Philadelphia Fed President Patrick Harker pushed back against market bets and downplayed the prospect of a 50bps hike in March. Apart from this, a softer tone around the US Treasury bond yields further undermined the safe-haven buck and benefitted the perceived riskier aussie.
The combination of supporting factors largely offset the Reserve Bank of Australia's dovish stance and assisted the AUD/USD pair to capitalize on this week's upward trajectory. This marked the third straight day of an uptick, summing up to a strong rally of nearly 200 pips from the lowest level since July 2020, around the 0.6965 area touched last Friday.
It, however, remains to be seen if bulls are able to maintain their near-term dominant position or opt to lighten their bets ahead of the closely-watched US monthly jobs report (NFP) on Friday. Hence, any subsequent move up might confront resistance near the 0.7175 area, which if cleared will suggest that the AUD/USD pair has bottomed out.
Technical levels to watch