AUD/USD bears in town for the open, eyes on 0.70 the figure

• AUD/USD bears have their focus on a test of 0.70 the figure. 
• External pressures remain despite US wage inflation possibly peaking. 

At 0.7070, AUD/USD closed on the backfoot losing 0.54% on Friday and is poised for a break of key 4-hour support for the opening sessions this week with a focus on a negative external environment. 

A very solid US labour market supports the Federal Reserve's inclination to front-load interest rate hikes, but a softer wage print would be expected to keep the US dollar contained and dependent on economic data going forward. US Nonfarm Payrolls rose a robust 428k in April, above the 380k consensus, data showed on Friday.

The Unemployment Rate remained unchanged at 3.6% but the average hourly earnings slowed to 0.3% MoM after posting a solid 0.5% MoM advance in March. That lowered the year-on-year increase in wages to 5.5% from 5.6% in March and could be a sign that inflation is peaking. Consequently, the US dollar slipped against a basket of currencies on Friday after hitting a 20-year high. The dollar index (DXY) reached 104.07, the highest since December 2002, before falling back to 103.64, down 0.09% on the day.

The next major US economic focus will be the Consumer Price Index on Wednesday which is expected to show that price pressures rose at an annual pace of 8.1% in April, just below March's reading of 8.5%. Additionally, a slew of Fed officials will be providing remarks in the upcoming week following the FOMC's May meeting. 

New York Fed's John Williams and Governor Christopher Waller's remarks will be key in shedding some light after Fed Chairman Jerome Powell's presser last week that failed to offer much in the way of clarity on what the Fed will do after frontloading rate hikes until neutral. 

Domestically, there is not a lot on the calendar for the week ahead. Traders are on standby for the wage figures that will be released on 18 May followed by the employment report released the day after. This information will be key for the Reserve Bank of Australia and will help traders gauge policy expectations ahead of the June meeting.

A focus on China

In the meantime, there will be a focus on lockdowns in mainland China and slowing global demand. The war in Ukraine remains a factor as well which has led to worsening supply-chain issues and a sharp rise in commodity prices which is providing less and less support to the Aussie.

Nevertheless, there is some good news coming out of the Chinese government which pressured iron ore prices higher last week. China Securities Regulatory Commission announced that it will support the financing of real estate companies as a feature of the government’s commitment to bolster infrastructure investment.

However, the Chinese trade data this week will likely show a slowing of imports with most provinces under some form of restrictions and Shanghai in a full month of lockdown. ''We expect further slowing in exports growth and weakness in imports. A soft trade outturn will add more pressure for follow-through by officials following their recent pledges on policy stimulus to support the economy,'' analysts at TD Securities said. 

AUD/USD technical analysis

The bears are taking on the 4-hour support and there are prospects of a retest of the prior lows. Should the bears keep on top, then a lower low is feasible for the coming sessions:

The bears will have an eye on 0.7000 and 0.6970 thereafter.