What Goes Up Can Also Come Down

Around half of yesterday's FOMC inspired rally in AUD/USD has been given back as the pair heads into the close just shy of session lows, the rate last changes hands at 0.7761 having retreated from resistance at 0.7760 in the European morning. US 10-year yields hit 1.75% during the US session, the highest since January 2020 which helped the greenback gain.

• AUD is coming under further pressure from weaker commodity prices; oil fell on Thursday while iron ore is under pressure in Singapore. Analysts at Bernstein predict Q1 shipment volumes for iron ore will fall 15.2% Q/Q and gain 2.6% Y/Y.
• From a technical perspective AUD/USD is firmer and has breached resistance at 0.7800, Mar 12 high. The break higher places hold a recent bearish focus. Instead, potential is seen for an extension higher with the focus on 0.7860, a Fibonacci retracement. A break of this level would strengthen the likelihood of a move towards key resistance at 0.8007, Feb 25 high. On the downside, short-term support has been defined at 0.7699, Mar 17 low.
• Markets look ahead to preliminary retail sales data for February, the consensus for the figure is 0.6%, from 0.5% in January. Westpac are more positive, expecting a 1% gain: "Retail turnover has been choppy through Nov - Jan due to both COVID disruptions ('mini-lockdowns' in several states) and shifts relating to 'Black Friday' sales and catch-up spend in Vic following the state's reopening. February saw yet more COVID disruptions, this time with Qld and Vic both instituting week-long lockdowns"