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AUD/USD clings to modest intraday gains above mid-0.7700s

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  • AUD/USD gained some positive traction on Thursday, albeit lacked any follow-through buying.
  • The aussie benefitted from a fall in the unemployment rate amid a subdued USD price action.
  • A cautious mood around the equity markets capped gains for the perceived riskier currency.

The AUD/USD pair held on to its modest daily gains above mid-0.7700s through the early European session, albeit lacked any strong follow-through buying.

A combination of factors assisted the pair to regain some positive traction on Thursday and for now, seems to have snapped two consecutive days of the losing streak. A modest pullback in the US Treasury bond yields kept the US dollar bulls on the defensive and extended some support to the AUD/USD pair.

The Australian dollar further benefitted from the latest jobs data, which showed that the unemployment rate fell to 6.4% in January. This was better than consensus estimates pointing to a dip to 6.5% from 6.6% previous. The report also showed the economy added 29.1K new jobs as against 40K anticipated.

That said, a cautious mood –  as depicted by a softer tone surrounding the equity markets – kept a lid on any further gains for the perceived riskier aussie. Adding to this, expectations for a relatively faster US economic recovery further collaborated towards capping the upside for the AUD/USD pair.

Investors turned optimistic about the strength of the US economic outlook amid the impressive pace of COVID-19 vaccinations and the slowing pace of infections. Wednesday’s upbeat US monthly Retail Sales data reinforced the view amid progress on the US President Joe Biden’s $1.9 trillion stimulus package.

Even from a technical perspective, failure to find acceptance above the 0.7800 mark earlier this week warrants some caution for bullish traders. This, in turn, makes it prudent to wait for some strong follow-through buying before positioning for any further appreciating move for the AUD/USD pair.

Market participants now look forward to the US economic docket, featuring Philly Fed Manufacturing Index, the usual Initial Weekly Jobless Claims and housing market data. This, along with the US bond yields, will influence the USD and produce some trading opportunities around the AUD/USD pair.

Technical levels to watch

 

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