AUD/USD flirts with 0.7500 at four-month high as USTR news battles pre-NATO, US data caution

• AUD/USD seesaws around four-month high as upbeat commodity prices, USTR news contradicts cautious mood.
• USTR reinstates expired product exclusions from ‘Section 301’ China tariffs.
• US President Biden will meet NATO allies from Europe, more sanctions on Russia teased.
• Australia’s CBA PMIs came in softer for March, US PMIs, Durable Goods Orders will be eyed next.

AUD/USD bulls take a breather at a four-month high surrounding 0.7510 during early Thursday morning in Asia, retreating to 0.7500 after a two-day uptrend. The Aussie pair’s latest pullback could be linked to the market’s anxiety ahead of the key data/events lined up for publication on Thursday, as well as recently released downbeat Aussie PMIs.

Australia’s preliminary readings of Commonwealth Bank (CBA) PMIs for March came in below-forecast for Manufacturing and Services, down to 57.3 and 57.9 versus 59.0 and 62.7 expected. However, the figures are better than their previous readings and push Composite PMIs to 57.1 versus 56.6 prior.

Elsewhere, US Senator John Cornyn said he met with US Treasury Secretary Janet Yellen to discuss Russian gold sanctions. The news becomes more worrisome as US President Biden will be meeting his European counterparts from North Atlantic Treaty Organization (NATO) to push for more sanctions on Moscow. On Wednesday, the Wall Street Journal (WSJ) signaled that the Biden administration is working on heavy sanctions on around 300 Russian lawmakers. To counter the same, Russian President Vladimir Putin has said, “Russia will seek payment in roubles for gas sold to ‘unfriendly’ countries.”

Additionally, hawkish comments from the Fed policymakers backed chatters over 50 basis points (bps) of a Fed rate-lift and Quantitative Tightening (QT) in May, which in turn challenged the market sentiment and AUD/USD prices.

Alternatively, a pullback in the US Treasury yields and news from the US Trade Representative’s (USTR) office surrounding the Sino-American trade pact seems to have helped the AUD/USD prices, due to Australia’s trade ties with Beijing. In the latest update, USTR mentioned that it will reinstate 352 expired product exclusions from US ‘Section 301’ tariffs on imported goods from China. These exclusions were expired in 2020.

Also positive was a pullback in the US Treasury yields from three-year high and discussions in the Chinese media that the People’s Bank of China (PBOC) can announce rate cuts.

Amid these plays, Wall Street snapped a six-day uptrend but prices of gold and crude oil improved. That said, the US Dollar Index (DXY) also remained positive.

Looking forward, global markets are likely to remain anxious and may portray inaction ahead of the Biden meeting with NATO friends. Also important to watch are the March month US PMIs and Durable Goods Orders for February.

Read: Durable Goods Orders Preview: Upside surprise set to trigger next leg up in the dollar

Technical analysis

A daily closing beyond an ascending resistance line from the mid-January and a downward sloping trend line from June 2021, respectively around 0.7490 and 0.7480 at the latest, enables AUD/USD bulls to aim for a late 2021 peak surrounding 0.7560.