AUD/USD RETREATS FROM INTRADAY HIGH BELOW 0.6700 AS AUSTRALIA TRADE SURPLUS SHRINKS

• AUD/USD picks up bids to reverse the previous day’s pullback from the highest level in a month.
• Australia Trade Balance drops in April despite improvement in Exports.
• Bond market’s consolidation after a heavy move, rate chatters in China also underpin Aussie pair’s rebound.
• Risk catalysts, mid-tier US data eyed for clear directions.

AUD/USD retreats from intraday high to near 0.6660 while paring the late Wednesday’s rebound from 0.6640 during early Thursday morning. In doing so, the Aussie pair fades the early Asian session’s run-up to refresh the monthly top, after reversing from the highest levels since May 11 the previous day. With this, the Aussie pair justifies mixed Australia trade data for April amid sluggish markets.

Australia’s Trade Balance declines to 11,158M in April versus 14,000M market forecasts and 15,269M prior. That said, the Pacific nation’s Exports rose by 5.0%, versus 4.0% prior, whereas the Imports repeat 2.0% growth for the said month.

Apart from the mixed Aussie data, sluggish sentiment in the market also prods the AUD/USD pair, due to its risk-barometer status. The reason could be linked to the fears of global economic slowdown and higher rates.

However, hawkish concerns from the Reserve Bank of Australia (RBA) contrasts with rate cuts by Chinese banks to underpin the AUD/USD pair’s recovery.

Earlier in the day, a slew of Chinese banks including the Industrial and Commercial Bank of China, Bank of China and Construction Bank cut their benchmark rates. The same raises speculations that the Chinese central bank, namely the People’s Bank of China (PBOC), will also cut the rates, which in turn suggests more fund flow to the economy and is positive for the AUD/USD pair due to Aussie-China trade ties.

Against this backdrop, the benchmark US 10-year Treasury bond yields rose the most in five weeks to 3.79% while the two-year counterpart marched to 4.52% at the latest. That said, the US 10-year bond coupons remain mostly unchanged at 3.79% by the press time whereas the two-year yields grind higher to 4.54% as we write. While portraying the market’s mood, Wall Street closed mixed and S&500 Futures struggle for clear directions.

Looking ahead, the US Initial Jobless Claims and the central bank chatters can entertain the AUD/USD pair traders ahead of Friday’s inflation data from China