AUD/USD bulls pause around 0.7200 with eyes on Australia employment data

• AUD/USD grinds higher at weekly top after two-day uptrend.
• Market sentiment dwindles amid lack of clarity over geopolitics, Fed concerns but softer USD favors riskier assets.
• Equities edge lower, yields seesaw around recent tops but gold stays firmer.
• Softer Aussie employment data for January may trigger consolidation of recent gains on RBA’s hesitance to support rate-hike.

AUD/USD bulls take a breather around a one-week high near 0.7200, after rising for the last two consecutive days to Thursday morning in Asia.

The risk barometer pair’s previous gains could be linked to the US dollar weakness and a pause in the further Russia-Ukraine tension, even if the de-escalation is doubted. Also favoring the quote were upbeat Aussie data and firmer gold prices.

Although recently softer comments from Moscow seem to ease the tension surrounding the invasion of Ukraine, the West and some of the Ukrainian sources reject the Russian troops’ retreat. On the other hand, the latest update suggests that Russia moves more military battalions towards the area near Ukraine and has also built a road and working on a bridge to soften the transport.

On the other hand, US Retail Sales and Industrial Production rose notably beyond the market forecasts and previous readouts with the latest MoM figures of 3.8% and 1.4% respectively in January. Further, the Federal Open Market Committee (FOMC) Minutes also showed the hawkish concerns among the board members even if marking no strong support for a 0.50% rate hike in March. Hence, the US Dollar Index (DXY) dropped for the last two days to refresh the weekly low.

It should be noted that Australia’s January Westpac Leading Index rose 0.13% versus the previous reading of 0% whereas China’s inflation figures eased for the said month.

Amid these plays, Wall Street failed to keep the previous day’s gains, closing mixed by the day’s end, whereas the US 10-year Treasury yields grind higher around multi-day tops, down 0.5 basis points (bps) to 2.04% at the latest.

That said, the AUD/USD traders will pay attention to today’s Australia Employment Change and Unemployment Rate figures for January for clear direction. Forecasts suggest that the Employment Change to print 0K figures versus 64.8K prior whereas the Unemployment Rate may remain unchanged at 4.2K. Given the downbeat market consensus and the Reserve Bank of Australia’s (RBA) repeated resistance to back the rate-hike environment, the pair may witness a pullback in case of softer numbers.

Technical analysis

A daily closing beyond the 50-DMA, near 0.7170 by the press time, joins firmer RSI and MACD signals to direct AUD/USD buyers towards the 0.7235-45 key resistance area comprising the 100-DMA and a descending trend line from early November.