AUD/USD regains traction to 0.7800 on upbeat Australian trade numbers, ignores soft Retail Sales

• AUD/USD picks up bids from the intraday low on strong trade data.
• Australian Retail Sales eases from 0.6%, Trade Balance crosses market consensus and prior.
• Market sentiment stays heavy as US Treasury yields extend Wednesday’s run-up, US issues warning over Microsoft email server hack.
• Fed’s Powell, second-tier job data will be the key together with the risk catalysts.

AUD/USD rises to 0.7775 in a fresh rebound from intraday low after Aussie data release on early Thursday. The quote extends bounce off 0.7752 following the upbeat trade figures for January while also paying a little heed to the soft Retail Sales figure for the stated month.

Australia’s Retail Sales eased below 0.6% initial estimates to 0.5% MoM. However, the pair buyers followed upbeat Trade Balance, 10,142M versus 6,500M expected and 6,785 prior, to trim the early Asian losses.

Even so, a sober mood in the market keeps the buyers chained ahead of the key data/events of this week.

Market sentiment remains heavy as reflation fears again jumped on the table after the ECB policymakers ruled out a serious need to tame bond bears. Also backing the mood could be the UK’s budget and progress on the US stimulus, suggesting further money inflow and challenges for easy money policy.

Elsewhere, the US issues an emergency warning after China-linked hackers roiled Microsoft’s email servers. Further, an in the US House on Thursday, due to rumored plan of another Capitol Hill attack, also heavy the risk.

Amid these plays, US 10-year Treasury yields rose 1.3 basis points to 1.483% whereas stocks in Australia are down 0.77% with the S&P 500 Futures currently declining 0.17%.

Moving on, weekly Jobless Claims and Q4 details for Nonfarm Productivity and Unit Labor Cost will be the key data but nothing more important than Fed Chair Jerome Powell’s speech, at 17:05 GMT. Should the Fed leader cites reflation fears, the bond bears will have an extra boost to defy the market sentiment.

Also important will be the updates on the US stimulus and coronavirus (COVID-19) conditions as well as China’s hints for further monetary policy, which has been easy off-late.

Technical analysis

Unless providing a decisive break below an ascending trend line from early November, at 0.7740 now, AUD/USD sellers should remain cautious. Meanwhile, 10-day SMA near 0.7840 guards immediate upside.