AUD/USD hovers below 0.7200 as RBA’s Lowe cheers digital payments, China inflation eyed

• AUD/USD grinds higher around two-week top, little changed on RBA Governor’s speech.
• RBA’s Lowe teases retail digital currency, review crypto-assets, stablecoins.
• Markets sentiment remains divided amid mixed concerns over Omicron, geopolitics and Beijing.
• China CPI, PPI can offer immediate direction, risk catalysts are the key.

AUD/USD bulls take a breather following a three-day uptrend to a fortnight top, taking rounds to 0.7170 during early Thursday morning in Asia. Mixed updates concerning Omicron troubled the pair traders but cautious optimism saved the bulls.

That said, the risk barometer pair paid a little heed to the latest comments from RBA Governor Philip Lowe but keeps the previous day’s break of the key technical levels, suggesting the further upside is on the table.

RBA’s Lowe justified the title of his speech, “Payments: The Future?,” as he spoke nothing of the economy nor the Aussie central bank’s next move at the latest. The policymaker said, “Both the regulators and the government understand this and are seeking to put in arrangements that encourage innovation and competition and make sure we have a secure and efficient system.” RBA’s Lowe adds, “There is no strong public policy case for an RBA-backed retail digital currency but a policy case could emerge quickly as technology, consumer preferences change.”

Earlier in the day news broke that Australia’s Deputy Prime Minister Barnaby Joyce tested positive for coronavirus while he was on a trip to the US.

The Aussie pair cheered US dollar weakness and firmer equities as early studies showed that the South African covid variant, dubbed as Omicron, is comparatively less harmful than the previous variants of the virus. Adding to the optimism were headlines from Pfizer signaling strong immunity for those who had taken three shots of the vaccines and previously tested positive to COVID-19.

However, re-introduction of the virus-led activity restrictions in Germany, France and the UK joined the tussles between the US and Russia, as well as the Sino-American tensions, to weigh on the risk appetite, which in turn probes AUD/USD bulls.

It’s worth noting that firmer readings of the US Job Openings and Labour Turnover Survey (JOLTS) renewed hopes of the faster Fed tapering ahead of Friday’s US Consumer Price Index (CPI) and underpinned the US Treasury yields.

Amid these plays, the Wall Street benchmarks posted mild gains while the US 10-year Treasury yields grew 4.8 basis points (bps) by the end of Wednesday’s North American session. Further, gold prices dropped after refreshing the weekly top.

Moving on, China’s CPI and Producer Price Index (PPI) details for November will be the key for AUD/USD traders, considering Sino-Aussie trade ties. Amid the mixed forecasts and the People’s Bank of China’s (PBOC) readiness to safeguard the economy from financial and covid-linked risks, the pair is more likely to react positively to the outcome, except for any strong negative surprises.

In addition to China data, risk catalysts and second-tier US jobs figures may entertain the AUD/USD traders.

Technical analysis

AUD/USD stays above a six-week-old previous resistance line and the 100-SMA, respectively near 0.7100 and 0.7165. However, the RSI line touches the overbought territory on four-hour (4H) play, suggesting a pullback. Should bulls keep reins, the 0.7200 round figure may offer an intermediate halt during the run-up to 50% Fibonacci retracement (Fibo.) level of October-December downside, around 0.7275.