AUD/USD is flirting with three-day highs near 0.7170, as the buying pressure around the Australian dollar remains unabated amid a rebound in risk appetite.
Market optimism set in this Wednesday after the Asian regional manufacturing data came in stronger and investors cheered Fed Chair Jerome Powell’s hints aimed at curbing inflation.
Powell said that tapering of the asset purchases could be quickened and the same could be discussed in the upcoming meeting.
Further, no bad news about the Omicron covid variant also helped calm the risk sentiment. The high beta currencies such as the aussie dollar benefit from the improved risk tone while the safe-haven US dollar struggles despite the recent strength in the Treasury yields.
The aussie also takes advantage of the upbeat Australian Q3 GDP report to extend its recovery from yearly lows of 0.7063 reached on Tuesday. The Australian economy contracted 1.9% QOQ in Q3 vs. -2.7% expected and 0.7% previous.
Traders ignored the contraction in the Chinese Caixin Manufacturing PMI data, as the risk recovery overshadowed and underpinned the sentiment around the major.
Looking ahead, the aussie bulls will await the US ADP jobs and ISM Manufacturing PMI to build on the recent upside. Powell’s testimony before the House Financial Services will also hog some limelight.
“From a technical perspective, any subsequent move up is likely to confront stiff resistance and attract fresh selling near the 0.7200 round figure. This should cap the upside near the 0.7220 region. On the flip side, weakness back below the 0.7140 area now seems to find some support near the 0.7125-15 region,” FXStreet’s Analyst Haresh Menghani notes.
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