AUD/USD bulls cheer China-inspired risk-on mood, softer yields to battle hawkish Fed below 0.7000

• AUD/USD picks up bids to refresh intraday high.
• Risk profile improves on US-China, growth chatters amid a light calendar.
• China inflation, RBA Monetary Policy Statement eyed for clear directions.

AUD/USD renews intraday top near 0.6965 as buyers benefit from the broad US Dollar weakness and the risk-on mood during early Thursday’s sluggish session. In doing so, the Aussie pair seems to prepare for the next day’s heavy data flow comprising China inflation and monetary policy statement from the Reserve Bank of Australia (RBA), not to forget the US consumer-centric data.

For starters, the risk-positive headlines surrounding China occupy the driver’s seat to propel the risk-barometer AUD/USD prices. Important among them are the receding fears of the US-China jitters, following the China balloon shooting by the US, join the hopes of People’s Bank of China’s (PBOC) rate cuts and the restart of the China-based companies’ listing on the US exchanges to favor risk-on mood in the bloc.

On the other hand, the pullback in yields could also be linked to the AUD/USD pair’s run-up, as the same weighs on the US Dollar. That said, yields rely on the market’s reassessment of the hawkish Fed talks as Chairman Jerome Powell hesitated in praising the jobs report but Fed Governor Christopher Waller, New York Federal Reserve President John Williams and Fed Governor Lisa Cook highlight inflation fear to suggest further rate increases from the US central bank. Furthermore, comments from the US diplomats such as Treasury Secretary Janet Yellen and President Joe Biden also amplified inflation concerns, as well as hopes of no recession in the US, which in turn suggests a safe side for the Fed to hike the benchmark rates.

Against this backdrop, US Dollar Index (DXY) traces softer Treasury bond yields to reverse the previous day’s recovery moves, down 0.22% intraday near 103.25 at the latest. That said, the US 10-year Treasury bond yields reversed from a one-month high to snap a three-day uptrend on Wednesday, pressured around 3.62% by the press time. Furthermore, the Asia-Pacific shares grind higher whereas the S&P 500 Futures ignore Wall Street’s losses to print mild gains by the press time.

Looking ahead, the US Weekly Jobless Claims can entertain intraday traders while Friday’s RBA Monetary Policy Statement and China inflation data will be crucial for the AUD/USD pair traders to watch. That said, the RBA’s latest hawkish appearance and Beijing-linked optimism will be at test on Friday.

Technical analysis

AUD/USD run-up appears doubtful unless crossing the 21 and 10-DMA confluence near the 0.7000 psychological magnet.