AUD/USD climbs back closer to 0.6700 mark amid softer USD, positive risk tone

• AUD/USD regains some positive traction on Friday amid a modest USD weakness.
• A positive risk tone undermines the buck and benefits the risk-sensitive Aussie.
• Hawkish Fed expectations, rising US bond yields should limit deeper USD losses.
• Traders might also prefer to wait for the US PCE data before placing fresh bets.

The AUD/USD pair attracts fresh buying near the 100-day SMA on Friday and stalls the previous day's retracement slide from a one-week high. The pair sticks to its intraday gains through the early European session and is currently placed near the daily high, just below the 0.6700 mark.

A modest recovery in the US equity futures prompts some selling around the safe-haven US Dollar, which, in turn, is seen lending some support to the AUD/USD pair. That said, worries about economic headwinds stemming from a surge in new COVID-19 cases in China should keep a lid on any optimism in the markets and the risk-sensitive Aussie. Apart from this, renewed fears that the Fed will retain its hawkish stance to tame inflation should limit the USD losses and contribute to capping the major.

Against the backdrop of a more hawkish commentary by the Fed last week, the upbeat US economic data released on Thursday revived bets for a more aggressive policy tightening by the US central bank. In fact, the US GDP growth for the third quarter showed that the economy expanded by 3.2%, faster than the 2.9% estimated. Moreover, the Initial Weekly Jobless Claims increased less than expected during the week ended December 17, pointing to a still-tight labour market and resilient US economy.

This, in turn, continues to push the US Treasury bond yields higher and supports prospects for the emergence of some dip-buying around the USD. Traders might also prefer to wait on the sidelines ahead of Friday's release of the US Core PCE Price Index - the Fed's preferred inflation gauge, due later during the early North American session. Hence, it will be prudent to wait for strong follow-through buying before positioning for any further intraday appreciating move for the AUD/USD pair.

Technical levels to watch