AUD/USD stays firmer above 0.7400 amid softer USD, upbeat sentiment

• AUD/USD grinds higher after printing the biggest daily gains in over a week.
• Equities, gold underpin recovery moves despite sluggish week-start.
• China trade numbers came in positive, Aussie NAB figures improved too.
• Fedspeak remains cautiously optimistic, Powell’s comments eyed.

AUD/USD holds onto Monday’s gains past 0.7400, edging higher around 0.7420 during the early Tuesday morning in Asia. The risk barometer pair recovered from the monthly low on Friday amid mixed concerns while a sluggish start to the week and the downbeat US dollar helped the Aussie pair print the biggest daily gains in seven days the previous day.

Although firmer US jobs report and President Joe Biden’s stimulus helped AUD/USDS bulls to remain hopeful, the Fed tapering tantrums didn’t allow bears to leave the desk. In doing so, the quote initially ignored upbeat trade numbers from Australia’s biggest customer, namely China, before tracking equities and gold to the north.

The passage of the US infrastructure spending bill followed firmer US jobs report for October to recall optimists of late. Joining them were chatters surrounding the likely change in the US Federal Reserve (Fed) board and its likely impact on the future monetary policies.

“A giddy President Joe Biden on Saturday hailed the congressional passage of a long-delayed $1 trillion infrastructure bill as a ‘once in a generation’ investment and predicted a broader social safety net plan will be approved despite tense negotiations,” said Reuters. Another US stimulus of around $1.75 trillion is looming but US President Biden seems hopeful to get it passed and hence favor the AUD/USD buyers.

On the other hand, US Nonfarm Payrolls (NFP) rose by 531,000 in October, better than the market expectation of 425,000. The figures were also beyond September's print got revised higher to 312,000 from 194,000. Further details of the publication revealed that the Unemployment Rate declined to 4.6% from 4.8% in September.

With around four or five Fed policymakers ready to leave the US central bank’s board, anxiety over the Fed’s next move amid push for tapering and rate hike weigh on the US dollar. Recently, Charles L. Evans, the chief executive officer of the Federal Reserve Bank of Chicago, said that the current surge in inflation is largely "temporary" and will fade as supply-side pressures get resolved, but he also sounded less convinced by that story than before.

Talking about the data, China reported a record trade surplus in October, with an all-time high surplus of $42 billion with the US. At home, the National Australia Bank’s (NAB) Business Conditions and Business Confidence indices grew past +5 and +10 figures to +11 and +21 respectively during October.

Amid these plays, US equities post a positive start to the week even as the US Treasury yields remain firmer. Further, the US Dollar Index (DXY) extended Friday’s loss.

Looking forward, firmer risk appetite enables AUD/USD to remain positive but a lack of major data/events ahead of Thursday’s Aussie jobs report may question the recovery moves. That said, the scheduled speech from Fed Chair Jerome Powell will be important for short-term direction.

Technical analysis

Friday’s Doji candlestick above 100-DMA backs AUD/USD run-up beyond a weekly resistance line, now support around 0.7410. However, the late October’s swing low near 0.7455 adds a filter to the upside momentum targeting 200-DMA, near 0.7550 at the latest.