AUD/USD justifies risk-barometer status to drop below 0.6900, US Consumer Confidence, NFP eyed

• AUD/USD reverses the previous day’s rebound from six-week low.
• Australia Building Permits slump in July, down -17.2% versus -2.0% expected.
• Headlines surrounding China, hawkish Fed bets recall bears.
• US Consumer Confidence for August, Fedspeak could entertain before Friday’s US NFP.

AUD/USD bears return to the table, after an upbeat start to the key week, as risk-aversion underpins the US dollar’s safe-haven demand during early Tuesday morning in Europe. That said, the Aussie pair drops 0.37% to revisit 0.6880 levels, after a failed rebound from the 1.5-month low the previous day.

With this, the AUD/USD pair justifies its risk barometer status, as well as downbeat Aussie data, to portray the bearish play.

Australia’s Building Permits for July declined to -17.2% versus -2.0% market forecasts and -0.6% revised prior.

Also likely to have weighed on the AUD/USD prices could be the push on the Aussie industries towards increasing wages and the resistance to tame inflation. Andrew McKellar, Chief Executive Officer of the Australian Chamber of Commerce and Industry warned during a Bloomberg interview against pushing for wage growth to beat the current levels of inflation.

Elsewhere, downbeat headlines surrounding Australia’s biggest customer China also please AUD/USD bears. Politico came out with the news suggesting the Biden administration to ask congress to approve a $1.1 billion arms sale to Taiwan, which in turn appears to have triggered the latest run-up. Before that, the movement of the US vessels in the Taiwan Strait and American diplomats’ visits to Taipei teased China. On the same line were concerns raised by Financial Times (FT), over the mounting pressure on Chinese banks. “Chinese residential property owners are rushing to pay off their mortgages early, heaping pressure on commercial banks that were already struggling to identify attractive lending opportunities,” said the news.

It’s worth observing that the market pricing of a 75 bps Fed rate hike in September grew to 72.5% at the latest, per CME’s FedWatch Tool, which in turn acts as an additionally bearish catalyst for the AUD/USD pair traders to watch.

While portraying the mood, the US 10-year Treasury yields retreat to 3.09% following the two-day uptrend to refresh the monthly high whereas the S&P 500 Futures struggles between gains and losses after downbeat performance of Wall Street.

To sum up, the risk-off mood and the firmer DXY could keep the AUD/USD bear hopeful, today’s US Consumer Confidence for August and comments from Fed speakers could entertain intraday traders. However, major attention will be given to Friday’s US jobs report as Fed Chair Powell raised concerns over economic slowdown and job market stress in his Jackson Hole speech.

Technical analysis

AUD/USD fades the bounce off a 3.5-month-old horizontal support area, surrounding 0.6850-55, as the corrective pullback failed to cross the 50-DMA hurdle of 0.6912.