AUDUSD grinds near 0.6630 as China’s covid woes jostle with US inflation-led optimism

• AUDUSD picks up bids to pare intraday losses around seven-week high.
• China reports the biggest jump in daily coronavirus cases since April.
• The US Dollar licks US CPI-led wounds amid sluggish yields.
• Receding hawkish bets keep the greenback bears hopeful ahead of US Michigan CSI data.

AUDUSD consolidates intraday losses around 0.6630, the highest levels since late September, as the market’s cautious optimism contrasts with the risk-negative headlines from China during early Friday. That said, the Aussie pair rallied the most since October 2011 the previous day before the bulls took a breather amid a lack of major data/events during the day-start moves.

Considering Australia’s close trading ties with China, the latest surge in the dragon nation’s covid numbers challenges the AUDUSD bulls. It’s worth noting Beijing reports the biggest daily jump in the covid cases in over a year as the mainland sees the daily coronavirus numbers growing past 10,000 for the first time in seven months.

On the other hand, optimism in the Asia-Pacific equity markets, by tracking Wall Street’s strong close, challenges the risk-barometer pair’s sellers. However, a banking holiday in the US and Canada joins sluggish US Treasury yields to challenge the pair’s moves.

Amid these plays, Asian stocks rise but the S&P 500 Futures struggles for clear directions around a two-month high.

It should be noted that the eight-month low of the US Consumer Price Index (CPI) bolstered the case of the US Federal Reserve’s (Fed) easy rate hike the previous day and propelled the pair prices the most in 11 years.

Moving on, a light calendar and fears emanating from China may challenge the AUDUSD traders ahead of the first readings of the US Michigan Consumer Sentiment Index (CSI) for November, expected 59.5 versus 59.9 prior. However, the buyers are likely to keep the reins unless today’s data prints an extremely high outcome.

Technical analysis

AUDUSD stays on the bull’s radar unless it drops back below the 0.6500 support confluence, comprising the previous resistance line from August and the 50-DMA.