AUD/USD pokes monthly top around 0.7400 on softer USD ahead of US NFP

• AUD/USD edges higher following a three-day uptrend to one-month high.
• Risk appetite improves as US data keeps pushing back tapering concerns, US hospitalizations ease.
• Worsening virus conditions in Australia, hurricanes in the US and pre-NFP caution probe the bulls.
• Australia Retail Sales, China Caixin Services PMI may entertain traders, US jobs report and ISM Services PMI will be important.

AUD/USD portrays typical pre-NFP jitters while taking rounds to the 0.7400 threshold, the monthly high, as Asian traders brush their screen for crucial Friday. Having initially eased on covid woes the previous day, the Aussie pair refreshed the monthly high, also printing a three-day uptrend, while closing around 0.7410.

The generalized US dollar weakness could be linked to the AUD/USD pair’s latest run-up. That said, the US Dollar Index (DXY) dropped the most in a week on Thursday to the one-month low as market players reject tapering concerns amid a run of early signals for today’s US jobs report.

On Thursday, the Initial Jobless Claims and Continuing Claims eased from the market consensus for the week ended on August 27. The four-week average of Initial Jobless Claims also declined from 366.75K to 355K. It should be noted that the Goods and Services Trade Balance eased in July whereas the Factory Orders came in better-than-expected for the said month. On the other hand, the Aussie calendar marked an upbeat Trade Balance for July.

Other than the data, receding hospitalization in the US battles the record high daily infections in Australia to keep the market’s mood positive and weigh on the US dollar. It’s worth noting that the increased odds of the European Central Bank’s (ECB) reduction of the weekly bond purchase also weigh on the US dollar, by the way of firmer Euro.

Amid these plays, Wall Street benchmarks came in as mildly positive and the US 10-year Treasury yields dropped 1.7 basis points (bps) by the end of Thursday’s North American session.

Moving on, the preliminary reading of Australia Retail sales for July, up for publishing at 01:30 AM GMT, is expected to improve from the previous -2.7%. While the risk-on mood may get an additional boost should the Aussie data improve and virus numbers recede, helping the AUD/USD to rise further, cautious sentiment ahead of the US Nonfarm Payrolls (NFP) may restrict the market moves going forward.

“Whatever the outturn for nonfarm payrolls, it is clear that the financial markets are so far taking expectations of US tapering well,” said Australia and New Zealand Banking Group (ANZ).

Read: Nonfarm Payrolls August Preview: Sine qua non for the taper

Technical analysis

A clear upside break of a 10-week-old falling trend line and 50-DMA, respectively around 0..7290 and 0.7375, enables the AUD/USD bulls to attack a yearly horizontal hurdle surrounding 0.7410-15.