• AUD/USD pauses around seven-week low, flashed before a few minutes.
  • Vaccine, geopolitical headlines battle hopes of further stimulus.
  • Aussie data were up, US figures down and RBA’s Debelle repeats no rate hikes tantrum.
  • A light in Asia highlights risk catalysts, US GDP is the key data to watch.

AUD/USD remains depressed around February lows, recently bouncing off 0.7578 to 0.7585, during the initial Asian session on Thursday. In doing so, the aussie pair bears the burden of the risk-off mood and the US dollar’s sustained run-up to the year’s high amid mixed catalysts and weak Treasury yields.

Yields that mattered earlier…

US 10-year Treasury yield dropped for three consecutive days to refresh one-week low the previous day, before consolidating losses on Wednesday closing around 1.612%. However, the US dollar index (DXY) stood firmer around the four-month top following its two-day rally. The greenback earlier tracked US bond moves but have parted ways off-late maybe as traders have other fears than the reflation woes.

Among them, Western tussles with China and the fresh fears of the Sino-American trade war take the front line. Following that, chatters over slower economic recovery out of the coronavirus (COVID-19) pandemic due to the vaccine rejection in certain parts of the world. Also on the negative side could be the risk of tapering the currently easy money policies.

On the contrary, Australia’s New South Wales (NSW), the biggest state population-wise, announced lifting covid restrictions. Further, the Commonwealth Bank of Australia (CBA) flashed upbeat preliminary activity figures for March. Also on the same side could be comments from the RBA Assistant Governor Guy Debelle who again rejected fears of rate-hike until 2024. It should be noted that American policymakers are voting on the extension of the paycheck program for another two months beyond the scheduled expiry of March 31 and the same is likely to offer a sustained flow of stimulus. Also in chatters is the $3.0 trillion infrastructure stimulus by the Biden administration, which in turn should have favored the risks.

The US data, on the other hand, came out as disappointing and spread fears of slower economic recovery.

Amid these plays, Wall Street benchmarks stayed red, with Nasdaq losing the most, whereas commodities and Antipodeans were also on the backfoot. Though, oil benefited from the Suez canal blockage.

Looking forward, the Asian economic calendar is mostly empty today and hence traders will keep their eyes on the risk catalysts for fresh impulse. US Q4 2020 final revision becomes the key data to watch.

Read: The February Grab-Bag Preview: Personal Income, Spending, Core PCE Prices and GDP

Technical analysis

Bearish MACD and a sustained break below 100-day SMA, currently around 0.7615, directs AUD/USD towards the February lows, also the yearly bottom, surrounding 0.7560.

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