AUD/USD pierces 0.7500 as market sentiment improves

• AUD/USD extends previous day’s rebound, refreshes weekly high.
• S&P 500 Futures renew all-time peak ignoring rebound in US Treasury yields.
• US-China talks add to the equity-led market optimism.
• Aussie Q3 inflation, US Q3 GDP become the key data to watch.

AUD/USD portrays risk-on mood amid a sluggish Tuesday morning, up 0.10% on a day around the intraday top of 0.7512. While the Sino-American talks of cooperation seem to be the latest catalyst behind the pair’s run-up, firmer prints of the US equity indices join firmer commodities to please the quote buyers during the crucial week.

“China's Vice Premier Liu He spoke with US Treasury Secretary Janet Yellen on October 26 via video call and talked about the macroeconomic situation and bilateral relations, according to a readout from China's commerce ministry,” said Reuters. The news quotes the readout saying, “Both sides said it was important for the two countries to strengthen communication and coordination on macroeconomic policies,” to print fruitful discussions.

It’s worth noting that China’s failures to match the phase one deal obligation previously challenged the trade relations between the world’s top two economies.

On a different page, recovery in China’s Evergande and the People’s Bank of China’s (PBOC) sustained liquidity injection also keep AUD/USD pair buyers hopeful.

Furthermore, global equity run-up and firmer commodity prices, despite the recent rebound in the US Treasury yields and the US Dollar Index (DXY), underpin the quote’s upside momentum.

Earlier in the day, Australia’s Roy Morgan Business Confidence data jumped the most in 2021. That said, the figures rose 10.7 points to 115.3 for October 2021. On the other hand, Dallas Fed Manufacturing Business Index rose past market consensus and prior readings in October but the Chicago Fed National Activity Index turned negative, -0.13 versus +0.05 previous readouts.

Against this backdrop, S&P 500 Futures refresh record top and the US 10-year Treasury yields pause two-day downtrend, helping the DXY to keep the previous day’s rebound from the monthly low.

Looking forward, AUD/USD traders will keep their eyes on Australia’s Q3 Consumer Price Index (CPI) for fresh impulse, expected 3.1% YoY versus 3.8% prior. However, major attention will be given to Thursday’s advance reading of US Q3 GDP and risk catalysts amid Fed tapering concerns and US stimulus chatters.

Technical analysis

Despite the latest uptick, the AUD/USD stays inside nearly a 65-pip trading range above 0.7450 since late Thursday, grinding higher close to July’s peak. The pair’s latest rebound from the monthly support also gains strength from the 10-DMA around 0.7440, suggesting further advances until the quote drops past 0.7440 support convergence. Meanwhile, an upside clearance of 0.7515 will aim for 0.7550 and July’s peak of 0.7600.