AUD/USD pokes 0.75 as Melbourne unlock, Evergrande news combat inflation fears

• AUD/USD regains upside momentum after stepping back from three-month high.
• World’s most locked-down city reopens, Aussie infections remain elevated but vaccinations jump.
• US-China trade optimism joins US stimulus hopes and Evergrande headlines to lift the sentiment.
• US PMIs eyed amid inflation fears, firmer Treasury yields.

AUD/USD picks up bids to refresh intraday top around 0.7490, up 0.26% on a day while consolidating the heaviest daily fall in October during early Friday. Although the inflation-linked headlines weighed on the Aussie pair the previous day, risk-on mood favors the quote of late.

Among the key positives was Melbourne’s unlock after 262 days of the coronavirus-led activity controls as the nation rushes over jabbing and can ignore the recent uptick in the infections. The ABC news cites 2,547 daily cases versus a one-week high of 2,643 flashed on Thursday.

Further, US President Joe Biden’s CNN town hall speech spread optimism over the infrastructure deal as the national leader said that he was close to striking a deal to pass major infrastructure and social spending measures, after weeks of intraparty bickering among his fellow Democrats, per Reuters.

It should be noted that the chatters over a virtual meeting between US President Biden and his Chinese counterpart Xi Jinping also favored the risk appetite. “White House officials are gearing up for a virtual meeting between President Joe Biden and Chinese leader Xi Jinping they hope will show the world Washington can responsibly manage relations between the rival superpowers, people familiar with the matter say,” said Reuters.

China’s Evergrande also flashed some positives after multiple days of denting the market sentiment. The troubled real-estate firm not only paid an $83.5 million bond coupon but also turns hopeful on asset sale to Hopson. “China Evergrande rival Hopson Development Holdings Limited, which had sought to buy half of the embattled developer’s property management unit, still considers the purchase agreement ‘legally binding’ despite Evergrande rescinding the sale on October 12,” said the South China Morning Post (SCMP).

Elsewhere, Fed policymakers continue to highlight inflation fears and pump the US Treasury yields around the key 1.70% level, a break of which triggered the US dollar rally in the past. Recently, New York Federal Reserve (Fed) President John Williams followed Fed Governor Christopher Waller to highlight the reflation woes.

Amid these plays, stock futures recover and the US Dollar Index (DXY) fades the previous day’s rebound from the three-week top. However, the preliminary readings of the US PMIs for October will be the key to watch. At home, Australia’s Commonwealth Bank PMIs came in mixed for October due to weaker than expected Manufacturing PMI.

Technical analysis

A nearly seven-month-old horizontal resistance area surrounding 0.7530-35 becomes the key hurdle to cross for the AUD/USD bulls amid overbought RSI conditions.