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AUD/USD trades with modest losses below 0.7400, focus remains on NFP


6 August 2021

The AUD/USD pair remained depressed through the early European session, albeit has managed to rebound few pips from daily lows. The pair was last seen trading with only modest losses, just below the 0.7400 mark. The pair continued with its struggle to find acceptance, or build on the momentum beyond the 0.7400 round-figure mark and witnessed some selling on the last day of the week. The downtick was sponsored by a modest US dollar strength and a softer tone around the equity markets, which tends to undermine the perceived riskier aussie.

The Australian dollar was further pressured by not so optimistic comments by the Reserve Bank of Australia (RBA) Governor Philip Lowe. Testifying before the House of Representatives Standing Committee on Economics, Lowe raised concerns that the Greater Sydney lockdown could plunge the nation into its second pandemic-driven recession.

On the other hand, the USD remained supported by Fed Vice Chair Richard Clarida's hawkish comments on Wednesday, noting that conditions for an interest rate hike could be met in late 2022. Clarida further signalled a move to taper bond buying later this year or early 2022 and forced investors to bring forward the likely timing of a policy tightening.

This was evident from a strong move up in the US Treasury bond yields, which was seen as another factor that acted as a tailwind for the USD. Apart from this, worries about the potential economic fallout from the fast-spreading Delta variant of the coronavirus further underpinned the greenback's relative safe-haven status.

The downside, however, remains cushioned, at least for the time being, as investors seemed reluctant to place any aggressive bets ahead of Friday's release of the US monthly jobs data. The closely-watched NFP report will influence the near-term USD price dynamics and provide a fresh directional impetus to the AUD/USD pair.

#source

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