AUD/USD fails to cheer upbeat Aussie trade data below 0.7200 ahead of US ADP Employment

• AUD/USD remains pressured despite the firmer Aussie trade numbers.
• Australia’s trade surplus grew in April, Exports and Imports also improved.
• Risk-aversion seems to weigh on the pair amid fears of inflation, growth.
• US ADP Employment Change, Factory Orders eyed for intermediate clues ahead of Friday’s NFP.

AUD/USD stays depressed around 0.7170, fading the bounce off intraday low, even as Australia’s trade numbers for April came in firmer. The reason could be linked to the market’s sour sentiment during Thursday’s Asian session.

Australia’s Trade Balance rose to 10,495M versus 9,300M market forecasts and 9,314M prior. Further details suggest that the Exports grew to 1% versus 0% previous readings while the Imports eased contraction from -5.0% to -1.0%.

Read: Australian Trade Balance higher than expected, A$10.495Bln vs. estimated A$9Bln, AUD/USD steady

It’s worth noting that the jittery markets, as well as the consolidation of gains near a one-month high, challenge AUD/USD buyers from cheering upbeat data at home, due to the pair’s risk-barometer status.

The risk-off mood could be linked to the fears of growth and faster Fed rate hikes, especially after the recent strong US data and hawkish Fedspeak. Also weighing on the sentiment could be headlines from China and anxiety ahead of this week’s top-tier events.

That said, the Fed’s monthly Beige readings joined comments from St. Louis Federal Reserve Bank President James Bullard to renew recession fears. Also challenging the growth concerns were fresh headlines suggesting trade/political tensions between the US and China, as well as between China and Australia, not to forget fears emanating from the Russia-Ukraine crisis.

Additionally, firmer US data also allowed Federal Reserve Bank of Richmond President Thomas Barkin to stay positive about the future rate hikes. The US ISM Manufacturing PMI for April rose to 56.1 versus the 54.5 expected and the 55.4 prior. Further, the US JOLTs Job Openings eased below 11.8 prior readings but matched 11.4 market forecasts.

Amid these plays, S&P 500 Futures rise 0.20% whereas the US 10-year Treasury yields retreat from a two-week high, down 1.0 basis points (bps) to 2.91% of late.

To sum up, the AUD/USD pair’s failure to stay firmer, despite upbeat Aussie data, hints at the underlying weakness in momentum. However, sellers should wait for the US ADP Employment Change for May, expected 300K versus 247K prior, will be eyed closed due to being the early signal for Friday’s US Nonfarm Payrolls (NFP), for conviction. Also important to watch is the US Factory Orders for May bearing forecasts of a 0.7% increase compared to 2.2% in previous readouts.

Also read: US ADP Employment Change May Preview: The labor market recedes from center stage

Technical analysis

The AUD/USD pair’s latest downside justifies the previous day’s bearish candlestick, namely the “Gravestone Doji”, as well as failures to cross the 100-DMA, around 0.7230 by the press time. However, a clear break of a three-week-old support line, near 0.7170 at the latest, becomes necessary for the bears to retake control.