• AUD/USD picks up bids during three-day uptrend, clings to mild gains of late.
• China’s trade surplus shrinks even as Exports jump in March.
• Strong Aussie employment supersedes softer Consumer Inflation Expectations to propel AUD/USD amid broad US Dollar weakness.
• US inflation, downbeat Fed Minutes renew policy pivot talks and weigh US Dollar, yields.

AUD/USD remains firmer for the third consecutive day even as China trade numbers fail to portray impressive outcomes for March, as well as amid softer Australia Consumer Inflation Expectations for April. The reason for the Aussie pair’s run-up could be linked to the early-day release of Australian employment data. That said, the risk barometer pair prints mild gains around 0.6710 by the press time.

That said, China’s headline Trade Balance improved to $88.10B in March versus the $39.2B expected and $116.8B prior whereas Exports grew much faster than Imports during the stated month.

Also read: China’s March Trade Balance: Surplus shrinks despite sharp jump in exports

Earlier in the day, the Australia Bureau of Statistics (ABS) mentioned that Employment Change jumps by 53K versus 20K expected and 64.6K prior while the Unemployment Rate remained unchanged versus the expectation of marking the 3.6% figure. Further, the Participation Rate also improved to 66.7% versus market forecasts of reprinting the 66.6% mark.

Additionally, Australia’s Consumer Inflation Expectations for April eased to 4.6% YoY versus 5.3% expected and 5.0% prior.

It should be noted that the previous day’s dovish remarks from Reserve Bank of Australia’s (RBA) Assistant Governor (Financial System) Michele Bullock prod the AUD/USD bulls, together with the latest fears of easy inflation and the RBA’s pause in rate hike trajectory.

On the other hand, the odds of the US Federal Reserve’s (Fed) policy pivot increase after downbeat US inflation data and unimpressive FOMC Minutes. That said, US Consumer Price Index (CPI) dropped to the lowest level since May 2021, to 5.0% YoY in March from 6.0% prior and versus 5.2% market forecasts. However, the annual Core CPI, namely the CPI ex Food & Energy, improved to 5.6% YoY during the said month while matching forecasts and surpassing 5.5% prior.

Further, the Minutes of the latest Federal Open Market Committee (FOMC) Monetary Policy Meeting also challenged the Fed hawks by stating that the expectations for rate hikes were scaled back due to the turmoil in the banking sector. “Several Federal Reserve policymakers last month considered pausing interest rate increases after the failure of two regional banks and a forecast from Fed staff that banking sector stress would tip the economy into recession,” mentioned Reuters.

Additionally, the latest comments from the Fed policymakers, including San Francisco Federal Reserve Bank President Mary Daly and Richmond Federal Reserve President Thomas Barkin, suggest easing inflation and challenges to the hawkish Fed, as well as for the US Dollar.

Against this backdrop, yields in Australia remain firmer while S&P 500 Futures print mild gains and the US Dollar remain pressured amid the cautiously optimistic markets.

To sum up, AUD/USD may witness further upside amid a light calendar for the day. However, the US Producer Price Index (PPI) and Fed talks will be eyed for clear directions.

Technical analysis

A successful break of the one-month-old previous support line, around 0.6700 by the press time directs AUD/USD buyers towards a downward-sloping resistance line from mid-February, around 0.6745 by the press time.