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AUD/USD holds onto recovery gains above 0.6300 with eyes on Aussie data

  • AUD/USD extends the latest recovery moves, but is still below the recent highs.
  • A pause in oil collapse, upbeat Aussie data and hopes of economic restart seem to play their role to stabilize the market.
  • The preliminary readings of Aussie PMIs, trade figures will decorate the economic calendar.

While extending late-US session recoveries from 0.6300, AUD/USD trades near 0.6322 as Asian markets open for Thursday. The pair manages to post its first positive closing in a week the previous day as oil prices stabilize and equities manage to post gains. Even so, coronavirus-led risks remain on the cards with Preliminary Aussie PMIs and trade figures to be watched for fresh impulse.

Risk-on or consolidation?

Even if oil and equity traders are taking a sigh of relief, the worst isn’t over yet. The coronavirus (COVID-19) still looms over the global powerhouses with extended lockdowns in many countries. Also raising alarms is the absence of a cure to the pandemic as well as the limited ability of the central banks to pump the global economy.

However, the readiness of the oil majors, including the US, OPEC+ and the Middle East, to ward off the risks of further declines in prices seems to have put a floor under the black gold. By the end of Wednesday’s settlement period, WTI futures for June gained 10% to cross $14.00.

Also supporting the risks could be US President Donald Trump’s push for the economic restart as well as the latest efforts from the European Central Bank (ECB).

It’s worth mentioning that the global rating agency Fitch recently forecasted the US GDP to contract by 5.6% in 2020.

Amid all these plays, the US 10-year Treasury yields recover five basis points (bps) to 0.62% with Wall Street benchmarks posting over 2.0% gains each by the end of Wednesday.

Moving on, preliminary readings of the April month PMIs from the Commonwealth Bank of Australia (CBA) become the immediate catalysts to watch whereas March month preliminary trade figures could direct the Aussie moves afterward. While the activity numbers are likely to recover, trade statistics could bear the burden of the virus outbreak and may weigh on the quote. Though, commodity basket performance, as well as COVID-19 updates, remain as the key.

Technical analysis

Despite bouncing off 21-day EMA, currently near 0.6265, the AUD/USD prices fail to close beyond a 50-day EMA level of 0.6340 the previous day. As a result, traders remain cautiously optimistic unless the pair crosses 0.6340 while targeting 0.6400 and the monthly top near 0.6445. Alternatively, a downside break below 0.6265 could recall the March-end top surrounding 0.6215.

 

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