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AUD/USD eyes first weekly gains in three above 0.7100 ahead of RBA SoMP, US NFP

AUD/USD bulls seem running out of steam around the weekly top near 0.7140 amid the initial Asian session on Friday.

The Aussie pair refreshed seven-day high before stepping back from 0.7168. The pullback moves, however, remain lackluster as await the quarterly release of the Reserve Bank of Australia’s (RBA) Statement of Monetary Policy (SoMP). Also challenging the AUD/USD bulls could be the market’s familiar pre-NFP anxiety.

Starting with the central bank actions, the European Central Bank (ECB) and Bank of England (BOE) hawks raised inflation concerns the previous day and propelled the US Treasury yields the most in a week, also drowning the equities. However, the US Dollar Index (DXY) couldn’t be saved from a five-day fall that pushes the greenback gauge towards the biggest weekly fall since March 2020.

That said, the BOE raised benchmark interest rates by 0.25% whereas the ECB refrained from rejecting sooner rate hikes and rather signaled a major policy change brewing, without giving many details though.

Elsewhere, US ISM Services PMI for January and Q4 Nonfarm Productivity came in strong but Factory Orders for December and Q4 Unit Labor Costs weakened, which in turn kept the trades on their toe ahead of the key US Nonfarm Payrolls (NFP) for January. At home, Australia Trade Balance for December eased below 9423M to 8356M as Exports and Imports both decline to 1.0% and 5.0% versus 2.0% and 6.0% respective priors. However, Aussie Building Permits jumped to 8.2% MoM during the stated month against -1.0% market forecast and +3.6% previous readouts. Additionally, the National Australia Bank’s (NAB) Business Confidence also rallied to +18, beyond -10 market consensus and -1 prior.

Moving on, the RBA will release the quarterly SoMP including the Aussie central bank’s economic forecasts and outlook on economic risks at 00:30 GMT.

“The RBA SOMP could create volatility, but it’s difficult to envisage it not being consistent with recent dovish rhetoric, so we may well just coast into the weekend,” said ANZ ahead of the outcome.

The statement will be closely examined amid the recently high inflation fears pushing the major economies towards the rate hike while the RBA rejects any such concerns. Should there be an upward revision in the inflation and GDP forecasts, coupled with the statements suggesting hawkish bias, AUD/USD prices will further room for further upside. Though, odds of witnessing cautious remarks can’t be ruled out, which in turn may allow traders to consolidate recent gains.

Technical analysis
AUD/USD seesaws between 50-SMA and 200-SMA on the four-hour (4H) chart, respectively around 0.7095 and 0.7185. However, receding bullish bias of MACD and repeated failures to cross a fortnight-old resistance line, near 0.7145 at the latest, keep sellers hopeful.

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