AUD/USD surrenders modest intraday gains, retreats back below mid-0.7400s

• AUD/USD edged higher during the early part of trading on Thursday, though lacked follow-through.
• Retreating US bond yields, a positive risk tone underpinned the USD and extended some support.
• Softer Australian jobs report turned out to be a key factor that acted as a headwind for the major.

The AUD/USD pair erased a major part of its modest intraday gains and was last seen trading near the lower end of the daily range, just below mid-0.7400s.

The pair built on the previous day's goodish bounce from sub-0.7400 levels, or over a three-week low and gained some positive traction during the early part of trading on Thursday. The US dollar retreated further from its highest level since May 2020, which, in turn, was seen as a key factor that extended some support to the AUD/USD pair.

The US consumer inflation figures released on Tuesday were not as bad as feared by the markets and forced the US Treasury bond yields to pause their recent strong rally to the multi-year peak. This, along with a generally positive tone around the equity markets undermined the safe-haven buck and benefitted the perceived riskier aussie.

This, to a larger extent, offset softer Australian employment details, which showed that the jobless rate held steady at 4.0% in March against expectations for modest downtick to 3.9%. Moreover, the number of employed people rose by 17.9K, significantly below 77.4K in February and lower than consensus estimates pointing to a reading of 40K.

The intraday uptick, however, lacked bullish conviction and the AUD/USD pair remained confined well within the overnight trading range. Expectations that the Fed would tighten its monetary policy at a faster pace to curb soaring inflation helped limit deeper USD losses and capped spot prices, warranting some caution for aggressive bullish traders.

Market participants now look forward to the US economic docket - featuring monthly Retail Sales, the usual Weekly Initial Jobless Claims and Prelim Michigan Consumer Sentiment Index. This, along with the US bond yields, will influence the USD price dynamics and provide some impetus to the AUD/USD pair later during the early North American session.

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