AUD/USD: Corrective bounce off 0.6600 appears elusive ahead of US NFP

• AUD/USD licks its wounds at weekly low, after two-day losing streak.
• US Dollar trades mixed but rose versus Antipodeans amid China-inspired risk aversion, mostly upbeat US data and hawkish Fed bets.
• Strong Australia trade numbers failed to impress bulls for long, despite upbeat start.
• Absence of major data at home may allow AUD/USD to pare recent losses ahead of key US employment report.

AUD/USD struggles to defend the corrective bounce off the weekly low around 0.6625 amid the early hours of Friday morning in Asia. That said, the Aussie pair dropped in the last two consecutive days while refreshing the weekly low on Thursday. In doing so, the risk-barometer pair aptly justifies the market’s sour sentiment while also taking clues from upbeat US data and hawkish Fed bets as the top-tier US jobs report looms.

The market’s risk aversion escalates as mostly upbeat US jobs data underpin hawkish Fed bets while China-linked headlines aren’t impressive. Additionally, the US-China tension and this week’s Reserve Bank of Australia (RBA) meeting are extra burdens on the AUD/USD, which in turn stopped the quote from cheering upbeat Aussie data at home.

While portraying the mood, Wall Street benchmarks dropped while the US Treasury bond yields refreshed a multi-day high.

It’s worth noting that China witnesses a heavy outflow of funds amid fresh fears emanating from the housing giants, including government-backed organizations. Adding strength to the downbeat mood could be the recently softer activity data from Beijing and the US-China trade war, not to forget the cautious mood as US Treasury Secretary Janet Yellen is in the dragon nation.

On the other hand, the RBA paused its two-time rate hike trajectory but showed readiness for further rate increases. On Thursday, Australia’s trade surplus rises to 11,791M MoM for May, compared with the expectations of 10,500M and 11,158M prior. Further, Exports grow 4.0% on a monthly basis while reversing the previous contraction of 5.0%. On the same line, imports rises 2% MoM and seasonally adjusted vs. 2.0% booked in April.

Elsewhere, US ADP Employment Change marked the largest one-month increase since February 2022, to 497K for June versus 228K expected and 267K prior (revised). That said, the ISM Services PMI also improved to 53.9 for the said month from 50.3 in May, versus the market expectation of 51.0. Further, the Challenges Job Cuts also slumps to 40.709K from 80.089K previous readings. However, the JOLTS Job Openings drops to 9.8M from 10.103M, compared to analysts’ estimation of 9.93M. It should be noted that the Initial Jobless Claims also rises to 248K for the week ended on June 30, versus 245K expected and 236K previous readings (revised).

Moving on, markets are likely to witness consolidation and can allow the AUD/USD pair to extend the latest rebound from the weekly low ahead of the top-tier US employment data for June. Among them, the headline Nonfarm Payrolls (NFP), expected to ease to 225K from 339K, will gain major attention considering the previous day’s upbeat signals from ADP Employment Change. Should the jobs report arrive as positive, the AUD/USD can have a further downside to witness.

Technical analysis

A daily closing below a five-week-old rising support line, now immediate resistance near 0.6635, keeps AUD/USD bears hopeful. However, the previous weekly bottom prods intraday sellers around 0.6595.