AUD/USD drops below 0.7100 on RBA Monetary Policy Statement, US NFP in focus

• AUD/USD renews intraday low as RBA MPS sharply raises inflation projections.
• RBA MPS revised down growth forecasts and expects 1.75% cash rate in 2022.
• Market sentiment sours after BOE propelled fears for inflation, growth, which in turn renewed USD buying amid firmer yields.
• US jobs report will be closely watched as Fed’s Powell rejected 75 bps.

AUD/USD takes offers to refresh intraday low around 0.7090 as the RBA MPS magnifies inflation woes during Friday’s Asian session. In doing so, the Aussie pair extends the previous day’s losses, the biggest since February 2021, as sour sentiment also exerts downside pressure on the risk barometer pair.

Reserve Bank of Australia’s (RBA) quarterly Monetary Policy Statement (MPS) justifies the Aussie central bank’s latest rate hike by significantly revising up inflation forecasts. The MPS also expects a 1.75% cash rate in December 2022, versus the latest print of 0.35%.

Read: RBA SMoP: Drastically revised up forecasts for inflation, AUD/USD dips below 0.7100

Other than the RBA’s MPS, the risk-aversion wave and the US dollar’s recovery also weigh on the AUD/USD prices.

The downbeat mood could be linked to the worsening inflation fears and concerns that the global growth will stall due to the surging prices, signaled by the Bank of England (BOE) the previous day. On the same line could be the Western sanctions on Russia due to its invasion of Ukraine, recently softer data from China and covid woes in the dragon nation.

It’s worth noting that the global woes and troubles in China, Australia’s key customer joins the US-China tensions to add to the risk-off catalysts and weigh on the Aussie prices.

While portraying the mood, the S&P 500 Futures drop 0.33% whereas the US 10-year Treasury yields rose one basis point (bps) to 3.08% at the latest.

Moving on, AUD/USD traders will pay attention to the risk catalysts and the yields for short-term directions ahead of the US jobs report for April. Market consensus favors the headline US Nonfarm Payrolls (NFP) to ease to 391K from 431K whereas the Unemployment Rate may also decline to 3.5% from 3.6%.

Also read: US April Nonfarm Payrolls Preview: Analyzing gold's reaction to NFP surprises

Technical analysis

AUD/USD stays on the way to a weekly low surrounding 0.7030 unless crossing the 100-DMA level of 0.7261.