AUD/USD sticks to modest intraday gains, around 0.6300 mark amid weaker USD

• AUD/USD stages a solid intraday bounce amid the emergence of fresh selling around the USD.
• A stable risk tone weighs on the safe-haven greenback and benefits the risk-sensitive aussie.
• Elevated US bond yields, recession fears should limit losses for the USD and cap the major.

The AUD/USD pair rallies over 100 pips from a three-day low touched earlier this Thursday and hits a fresh daily high, around the 0.6330 area, during the early North American session. The pair, however, retreats a few pips and is currently placed near the 0.6300 round-figure mark, still up around 0.50% for the day.

As investors look past the mixed Australian employment details, the emergence of fresh US dollar selling turns out to be a key factor offering support to the AUD/USD pair. A modest recovery in the risk sentiment - as depicted by a mildly positive tone around the equity markets - undermines the safe-haven buck and benefits the risk-sensitive aussie.

The intraday USD selling remains unabated following the release of the weaker Philly Fed Manufacturing Index, which remains in the contraction territory for the second successive month in October. This, to a larger extent, overshadows an unexpected fall in the US Initial Jobless Claims and does little to impress the USD bulls or provide any impetus.

That said, growing worries about a deeper global economic downturn should keep a lid on any optimistic move. Apart from this, elevated US Treasury bond yields, bolstered by firming expectations for a more aggressive policy tightening by the Fed, should act as a tailwind for the greenback. This, in turn, warrants some caution for the AUD/USD bulls.

Apart from this, the Reserve Bank of Australia's (RBA) decision to slow the pace of policy tightening earlier this month suggests that the path of least resistance for the AUD/USD pair is to the downside. Hence, it will be prudent to wait for strong follow-through buying before confirming that spot prices have bottomed out and positioning for further gains.

Technical levels to watch