• AUD/USD grinds higher at weekly top, steady after rising the most in two weeks.
• Market sentiment improves on mostly firmer data, China stimulus and mixed Fedspeak.
• Yields dropped but Wall Street pleased buyers amid hopes of Powell’s not-so-hawkish remarks.
• US Core PCE Inflation numbers may entertain traders ahead of Fed Chair Powell’s speech at Jackson Hole.

AUD/USD floats in the air around 0.6980 after posting the biggest daily jump in a fortnight. The Aussie pair’s gains could be linked to the market’s optimism led by multiple factors surrounding China and the US. However, the latest geopolitical headlines and cautious mood ahead of Fed Chair Jerome Powell’s appearance at the Jackson Hole Symposium seems to have probed the bulls.

China’s one more stimulus and a holistic approach by the domestic institutions to safeguard the world’s second largest economy renewed market optimism earlier. On the same line could be the mildly positive US data and the Federal Reserve (Fed) policymakers’ speeches that sounded cautiously optimistic. It’s worth noting, however, that the US-China political tussles and US President Joe Biden’s response to Iran seems to have tamed the market’s optimism, as well as the AUD/USD prices, of late.

Talking about the US data, the second estimate of the US Gross Domestic Product (GDP) Annualized improved to -0.6% in the second quarter (Q2) versus -0.9% flash estimations and -0.8% market forecasts. Further, US Initial Jobless Claims dropped the lowest levels in seven weeks, to 243K for the week ended on August 19 versus 253K expected and a revised down prior of 245K.

Elsewhere, Kansas City Fed President Esther George said on Thursday, "For the near-term thinking about higher interest rates seems reasonable to me." The policymaker also mentioned that (it’s) too soon to say what to expect in September (as) more key data coming. Philadelphia Fed President Patrick Harker was on th same line while he noted, per Reuters, that he wants to see the next inflation reading before deciding on the September rate decision but added that a 50 basis points rate hike would still be a substantial move. Further, Philadelphia Fed President Patrick Harker noted on Thursday that he wants to see the next inflation reading before deciding on the September rate decision but added that a 50 basis points rate hike would still be a substantial move, per Reuters.

It’s worth noting that the US has suspended 26 Chinese carrier flights in response to China action, per Reuters. On the other hand, A letter got viral quoting US President Joe Biden as saying, “The US struck Iran-backed forces in Syria in order to safeguard American civilians both at home and abroad.”

Amid these plays, Wall Street marked the biggest daily jump in a week while the US 10-year Treasury yields dropped back to 3.03%, after rising to 3.10% the previous day.

Looking forward, the AUD/USD pair traders may witness a choppy session amid the market’s anxiety ahead of Fed Chair Powell’s speech. However, the US Core Personal Consumption Expenditure (PCE) Price Index, the Fed’s preferred inflation gauge, may entertain the markets. Forecasts suggests, the YoY print to ease to 4.7% from 4.8% while the monthly figures may drop to 0.3% while 0.6% prior.

Also read: Jackson Hole Symposium Preview: Will Powell power dollar bulls?

Technical analysis

An impending bear cross on the four-hour chart keeps AUD/USD sellers hopeful to witness the latest swing low around 0.6855. However, the early-month top near 0.7050 guards the pair’s immediate upside.