AUD/USD stays defensive above 0.7500 as Australia bond yields ease from eight-year high
- AUD/USD remains sidelined around five-month high, bulls running out of steam.
- Aussie 3-year bond yields rose to the highest since 2014, US counterpart pokes January 2019 peak.
- Sentiment dwindles over Russia-Ukraine woes, China’s covid fears as well.
- Lack of major data/events can restrict market moves during the NFP week, China’s PMI will be important too.
AUD/USD struggles for a clear direction around 0.7510-15 as bond bears jostle in Australia, as well as the US, during Monday’s Asian session.
Not only the Treasury bond yields but geopolitical fears and challenges emanating from China also test the AUD/USD prices. Alternatively, firmer commodities and the Reserve Bank of Australia’s (RBA) repeated rejection of the rate-hikes keep the pair buyers hopeful.
That said, Australia’s 3-year Treasury yields rally to the highest since December 2014, before recently easing to 2.30%. On the other hand, the US 3-year bond coupon pokes the highest levels since March 2019, firmer around 2.50% by the press time.
Elsewhere, fears that Russia and Ukraine will have another endless week of negotiations, as well as sustained invasion of Kyiv by Moscow, challenge the AUD/USD bulls. On the same line are the latest coronavirus updates from China suggesting lockdowns in Shanghai.
It should be noted that the hawkish Fedspeak also tests the AUD/USD buyers but the recently downbeat sentiment and housing data from the US helped the quote to remain firmer. Additionally, strong prices of iron ore, Australia’s key export, underpin the quote’s upside momentum.
That said, a mildly negative S&P 500 Futures and a light calendar restrict the AUD/USD pair’s immediate moves.
However, the US jobs report and official prints of China’s activity numbers for March will be important to watch and may challenge the AUD/USD bulls going forward.
Technical analysis
Overbought RSI conditions and sidelined moves near the late 2021 peak surrounding 0.7560 challenges the AUD/USD bulls. Alternatively, pullback moves may initially aim for early-March’s top near 0.7440.