August 8, 2022 03:05 AM ET
By: AnalysisWatch
The AUD/USD pair picks up from Friday's late bounce when it was in the 0.6870 area, or above a two-week low, and gains some positive traction on the first day of the new week. The steady intraday rise has continued into early European trading, with spot prices reaching a new daily high of around 0.6900 in the final hour.
The positive Chinese trade balance data released over the weekend proved to be a key factor supporting the China-derived Australian dollar. Apart from that, the subdued price action of the US dollar acts as a tailwind for the AUD/USD pair. A softer tone in US government bond yields is keeping USD bulls on the defensive. This, along with signs of stability in equity markets, is weakening the safe-haven dollar and driving capital flows toward the risk-sensitive Australian dollar.
Still, rising concerns about a global economic downturn and tensions between the U.S. and China over Taiwan are likely to curb any optimism in the markets. In addition, renewed speculation about Fed policy tightening argues for the possibility of dip-buying in the USD. This in turn urges caution against aggressive bullish bets on the AUD/USD pair, as no market-moving economic data will be released from the US on Monday.
Friday's monthly U.S. jobs report showed that the economy added 528,000 jobs in July, far exceeding consensus estimates. Other details showed that the unemployment rate unexpectedly fell to 3.5% from 3.6% previously. In addition, average hourly wages exceeded expectations, rising 0.5% month-over-month in July, pointing to a further increase in inflationary pressures and raising bets that the Fed will raise interest rates by 75 basis points at its next meeting in Septembe