AUD/USD retakes 0.7500 mark amid weaker USD

• AUD/USD regained positive traction on Friday and reversed the previous day’s retracement slide.
• An improvement in the risk sentiment undermined the safe-haven USD and remained supportive.
• Elevated US bond yields did little to impress the USD bulls or hinder the strong intraday move up.

The AUD/USD pair built on its intraday ascent and climbed back above the key 0.7500 psychological mark during the first half of the European session.

Following the previous day's turnaround from the highest level since July, the AUD/USD pair caught some fresh bids on the last day of the week amid the emergence of fresh selling around the US dollar. Reports that China Evergrande made funds available for a dollar bond coupon eased concerns about a credit crunch in China's real estate sector and boosted investors' sentiment. This, in turn, undermined the safe-haven greenback and acted as a tailwind for the perceived riskier aussie.

The intraday USD downtick comes despite elevated US Treasury bond yields, bolstered by expectations for an early policy tightening by the Fed. Investors have been pricing in the possibility of an interest rate hike in 2022 amid worries about a faster than expected rise in inflation. The speculations were reinforced by Fed Governor Christopher Waller’s comments on Thursday, saying that the US central bank may have to act faster if inflation continues to climb and remains too high.

Hence, Friday's focus will be on a scheduled speech by Fed Chair Jerome Powell, which will play a key role in influencing the USD price dynamics. Heading into the key event risk, the US economic docket, highlighting the release of flash PMI prints for October, and the US bond yields will be looked upon for some impetus around the AUD/USD pair. Apart from this, traders might further take cues from the broader market risk sentiment to grab some short-term opportunities heading into the weekend.

Technical levels to watch