AUD/USD, coiled and it gives us plenty of risk events this week, including the RBA

• AUD/USD traders get set for a busy week. 
• The RBA, NFP and Fed chair will be the main focus. 

The Australian dollar is taking its cues from sentiment surrounding the Federal Reserve, robust US data, local economic data and while also looking to China's upcoming parliament meeting for new economic support.

The Aussie is correcting higher and away from the January low of 0.6689 in the footsteps of the return of risk appetite. Markets got a boost last week on the back of comments by Atlanta Fed President Raphael Bostic. The central banker said on Thursday that the impact of higher US interest rates on the economy may only begin to "bite" in earnest this spring. Earlier that day, US data, however, pointed to a still strong U.S. jobs market ahead of this week's Nonfarm Payrolls and Federal Reserve chairman Jerome Powell's testimony. 

A number of regional Fed Presidents have expressed their openness to increasing the amplitude of rate hikes from 25bp to 50bp if the data warrants so markets will be looking to Powell for confirmation and a hint of a bias this week one way or another. 

''Powell may be questioned on this at his testimony; if so he is likely to reiterate that the absolute level of rates is ultimately what matters,'' analysts at ANZ Bank said. ''The text of the semi-annual report was released on Friday and noted that further interest rate rises will be appropriate and that a period of below-trend growth may be needed to get inflation back to 2.0%.''

However, the analysts also argued that ''the recent jobs and inflation data do not support arguments that interest rates are restrictive and it will be important to scrutinize the next round of hard data, starting with non-farm payrolls this Friday. ''

Analysts at TD Securities said that ''US payrolls likely mean-reverted to a still firm pace in Feb after an unexpected 517k surge in Jan. We also look for the Unemployment Rate rate to stay unchanged at 3.4%, and wage growth to print a strong 0.4% MoM.'' It is worth noting that the range of economists’ estimates is 100-325k.

China's annual parliament session

Meanwhile, the focus is now turning to China's annual parliament session where it set its economic goals for the year and unveiled fresh policy support to consolidate an economic recovery following the removal of stringent COVID-19 curbs. China’s National People’s Congress (NPC) has kicked off its annual parliamentary session by announcing a modest target for economic growth of about 5 percent. The session is lso set to hand President Xi Jinping a third term in office and implement the biggest government shake-up in a decade. “Global inflation remains high, global economic and trade growth is losing steam, and external attempts to suppress and contain China is escalating,” outgoing Premier Li Keqiang said during his speech to open the parliament, which will run through March 13.

All eyes on the RBA

The focus will be on whether the Reserve Bank of Australia softens its language in light of recent weaker data. ''On the back of the widening breadth and persistence of inflation, the cash rate in Australia remaining below comparable G10 economies, and the Australian economy more likely to benefit from China's reopening, we expect the RBA to push on with hikes in Apr and May,'' analysts at TD Securities said.

AUD/USD technical analysis

The price has been range bound within last week's opening range for the most part. A break of the upside opens risk to the next 100 pip box and 0.6920 above there. To the downside, a break of support op[ens risk to a test of the 0.6580s and then the 0.6520s.