AUD/USD inches closer to 0.7100, focus on Aussie national cabinet meeting, US data

• AUD/USD refreshes intraday low as market sentiment sours, pares the previous day’s gains.
• Aussie policymakers called snap cabinet meeting to discuss the Omicron battle plan amid record jabbing and holiday season.
• Doubts over global policymakers’ assurance over virus, cautious sentiment ahead of US data weigh on the market mood.
• US GDP, CB Consumer Confidence will decorate calendar, Aussie policymakers will try to placate bears.

AUD/USD takes offers to refresh intraday low near 0.7135, down 0.27% on a day heading into the European session. The Aussie pair rallied the most in a week the previous day amid risk-on mood. However, risk appetite weakens ahead of the press conference by Aussie Prime Minister Scott Morrison and important US data.

With a steady increase in covid numbers and a 90% vaccination rate, Aussie policymakers called a snap cabinet meeting to discuss mask mandates and vaccine booster strategy on Wednesday. While PM Morrison is more likely to laud the world’s higher jabbing ratio, listeners are more interested in hearing about the activity restrictions during the holiday period.

Elsewhere, US President Joe Biden pushed for more vaccinations and sounded cautiously optimistic during Tuesday’s national address. The US leader also said, per The Hill, “I think there is still a possibility that his Build Back Better agenda can get done, despite Sen. Joe Manchin’s opposition of the climate and social spending bill.” This joins with the Bloomberg news that the US Food and Drug Administration (FDA) is up for authorizing a pair of pills from Pfizer and Merck to treat Covid-19 as soon as this week to favor risk-on mood. On the same line were the updates from the Defense One suggesting, “US army creates single vaccine effective against all covid, sars variants.”

It should, however, be noted that recently improving US inflation expectations, per the 10-year breakeven inflation rate per the St. Louis Federal Reserve (FRED) data, challenges the market bulls ahead of the key US economic data release. Furthermore, the Sino-American and the US-Russia tussles add to the bearish bias for AUD/USD prices.

Amid these plays, the US 10-year Treasury yields dropped two basis points (bps) to 1.465% whereas the S&P 500 Futures decline 0.20% intraday even as the Wall Street benchmarks snapped a three-day downtrend.

Considering the cautious mood in the market, AUD/USD prices are likely to remain pressured until any major positives are announced by Australia PM Morrison or US data favors the need for easing. Among the US data, the final Q3 GDP and the CB Consumer Confidence for December are crucial to watch.

Read: Conference Board Consumer Confidence December Preview: Where do Americans turn for optimism?

Technical analysis

Failures to stay beyond 100-HMA and 200-HMA, around 0.7140-45 by the press time, directs AUD/USD sellers towards 50.0% Fibonacci retracement (Fibo.) of December 03-16 upside near 0.7109. Following that, the 0.7100 threshold and 61.8% Fibo. support around 0.7080 will be in focus. Meanwhile, a clear run-up beyond 0.7145 will aim for a two-week-old horizontal resistance zone surrounding 0.7180-90.