AUD/USD leans bearish above 0.7100 on downbeat CFTC signals, Russia-linked fears

• AUD/USD pares the first daily gain in three, retreats from intraday high.
• Market sentiment dwindles as yields remain pressured, stock futures print mild gains.
• Putin terms claims of imminent Ukraine invasion as ‘provocative speculation’, bearish bets again Aussie rose to the highest since November.
• CME FedWatch hints at receding probabilities for 0.50% rate-hike in March, Aussie jobs report will be key.

AUD/USD eases from the intraday top towards 0.7100 by portraying the tensed markets during Monday’s Asian session. Even so, the Aussie pair snaps a two-day downtrend by flashing mild gains around 0.7130-35 by the press time.

That said, the risk barometer pair’s early Asian gains could be linked to the consolidation of previous losses amid mildly bid US stock futures. However, escalating fears over Russia’s invasion of Ukraine and bearish signals from the latest data from the Commodity Futures Trading Commission (CFTC) seem to weigh on the AUD/USD prices of late.

“A dovish Reserve Bank of Australia is driving hedge funds to ramp up bets against the nation’s currency as the policy stance increasingly diverges from a hawkish Federal Reserve,” said Bloomberg. The news adds, “Leveraged funds have boosted net Australian dollar shorts to the most since November.”

Comments from US President Joe Biden raised concerns of an imminent military attack by Russia over Ukraine. Not only the US but the UK and Eurozone leaders also flashed worrisome signals for the much-debated geopolitical event.

It’s worth noting, however, that Russian President Vladimir Putin termed any such claims as ‘provocative speculation’, per AFP News. However, market players seemed to not believe in Putin’s comments as Bloomberg said, “Standoff with Russia over Ukraine heads into most tense week yet.”

Amid these plays, the US 10-year Treasury yields lick their wounds around 1.95%, after shedding over 11 basis points (bps) the previous day. Further, the S&P 500 Futures print mild gains by the press time.

Moving on, market players will be more interested in Thursday’s Australia jobs report for January after the Reserve Bank of Australia’s (RBA) recently bearish rhetoric. Also important will be Tuesday’s RBA Minutes and FOMC Minutes, up for publishing on Wednesday. Above all, concerns over the Fed’s rate-hike and the Russian invasion of Ukraine will be crucial.

Read: AUD/USD Weekly Forecast: Bulls hesitate as Lowe pours cold water on tightening speculation

Technical analysis

AUD/USD bears need validation from 10-DMA level surrounding 0.7130 to extend the previous day’s downside break of a fortnight-old support line, now resistance around 0.7145. The recovery moves, however, remain elusive until crossing the 100-DMA, near 0.7245 by the press time.