Bid In Early Asia

AUD bid in Asia as equity markets in the region open higher on positive risk sentiment. AUD/USD last changes hands at 0.7712, 17 pips higher on the session.

• AUD/USD came off overnight highs of 0.7725 during the US session as the greenback saw a modest move higher on the back of higher US yields as markets continue to digest US President Elect Biden's stimulus plan. While much of the drop is attributed to a stronger greenback AUD underperformed against other crosses, AUD/NZD eased from 3-month highs.
• Westpac Consumer Confidence Index pulled back to 107 from 112, retreating from a 10-year high. Westpac Chief Economist Evans said: "There may also be an element of statistical correction given that the index had surged by 40% between August and December. All components of the index fell in January."
• AUD could come under some pressure as upside in iron ore is expected to limited. China's steel margins have recently come under pressure given the increase in input costs, both for coking coal and iron ore, which has cast some doubt on production levels.
• AUD/USD is still trading below the recent high of 0.7820, Jan 6 high. Although the uptrend remains intact, there is a risk the pair will retrace lower short-term in a move that would be considered a correction. This would allow an overbought condition to unwind. The pair Monday probed key support of 0.7666. A clear break would expose 0.7600 and below. On the upside, clearance of 0.7820 resumes the uptrend.