AUD/USD keeps first weekly gains in three above 0.7550 amid risk-on mood

• AUD/USD retreats after three-day uptrend, remains sidelined of late.
• Fedspeak, upbeat US data favor bulls, Aussie PMI, Sino-American tussles cap the upside.
• US Durable Goods Orders, qualitative factors will offer fresh impulse, Asian session can be quiet.

AUD/USD bulls take a breather around 0.7575 as Thursday’s Asian session begins, following a three-day run-up that poked the 0.7600 threshold. The Aussie pair’s latest strength could be linked to the Fedspeak that tones down the last week’s hawkish rhetoric. It should, however, be noted that headlines concerning China and downbeat Aussie data, not to forget uncertainty over US President Joe Biden’s infrastructure spending and covid strain fears, seem to probe the bulls from time to time.

Fed rate hike expectations pushed back…

US Federal Reserve (Fed) Chairman Jerome Powell and colleagues get an upper hand in the fight to tame the rate-hike and tapering concerns. After Powell’s reaffirmation that the inflation risks are transitory, posing no major challenge to the Fed’s current policy, President and CEO of the Federal Reserve Bank of Boston Eric Rosengren expects, “most price increases will be reversed going into next year.” On the same line were comments from US Treasury Secretary Janet Yellen saying, “Most measures of inflation expectations remain well-anchored.”

It’s worth noting that Atlanta Federal Reserve President Raphael Bostic and Dallas Fed President Robert Kaplan stayed hawkish over the Fed’s next moves but got fewer accolades.

Amid these plays, US rate hike expectations data suggest the first full rate increase is recently priced in at February 2023 versus December 2022 during the last week.

Hence, a reduction in the rate hike calls favors the market sentiment and the risk-barometer AUD/USD prices.

Elsewhere, China’s warning to the US over warships in Taiwan Strait and Sino-American trade tussles, not to forget Canberra-Beijing woes, test the risk appetite and favor US dollar buyers. Additionally, the lack of time in completing Biden’s infrastructure spending talks before the US policymakers take a recess to join the Delta Plus covid variant fears to weigh on the mood and put a bid under the greenback.

Talking about data, US PMIs were modestly strong, with Manufacturing growing more than Services, but Aussie activities eased in June, per preliminary PMI data.

Against this backdrop, Wall Street closed mixed and the US 10-year Treasury yields remain firm by the end of Wednesday’s North American trading session.

Looking forward, a lack of major data/events up for publishing during the Asian session could keep AUD/USD traders troubled but the bulls may keep the reins until any major challenges to the risk appetite appears, likely from China or relating to US stimulus.

Technical analysis

Despite crossing the 200-day SMA level of 0.7558 on a daily closing, AUD/USD needs a clear upside break of 0.7585-90 before aiming the 0.7600 threshold and the month-start low near 0.7645.