• AUD/USD bears keep their defensive mode intact below 0.6900.
• USD holds the upper hand amid a risk-off mood, hawkish Powell.
• The aussie eyes Retail Sales data in the critical US NFP week ahead.

AUD/USD is trading below 0.7000, starting a brand new week on the back foot, as US dollar bulls keep the upper hand following Fed Chair Jerome Powell’s hawkish rhetoric during his appearance at the Jackson Hole Symposium on Friday.

Powell, in his prepared remarks on day 2 of the annual Fed event, said that “restoring price stability will likely require maintaining a restrictive policy stance for 'some time, adding that the Decision on the September rate hike will depend on the totality of data since July meeting.”

The US dollar staged a sharp V-shaped recovery on his comments, despite the retracement in the Treasury yields across the curve. The negative shift in the market’s perception of risk sentiment helped the uptick in the safe-haven greenback, as major Wall Street indices tumbled roughly 3.50% after Powell poured cold water on the idea of a Fed pivot that could jeopardize its war against inflation.

Heading into a new week, risk-off flows seem to extend into the Asian trading this Monday, reflective of the submissive tone in the higher-yielding aussie. Bulls also remain at bay, awaiting the Australian Retail Sales data for July due for release at 0130 GMT. The country’s consumer spending is seen rising by 0.3% in the reporting period vs. 0.2% booked previously.

Australian retail sales volumes rose 1.4% in the June quarter of 2022, hitting a new record level, for the third consecutive quarter, the Australian Bureau of Statistics (ABS) showed about a month ago.

The pair will also take cues from the broader market sentiment and the speech from Fed official Lael Brainard in the US Nonfarm Payrolls week ahead. China’s Manufacturing and Services PMIs will be also closely eyed for fresh hints on the health of Australia’s biggest trading partner, China.

AUD/USD: Technical levels to consider