AUD/USD defends 0.7300 on upbeat Australia Q2 GDP

• AUD/USD rebounds from intraday low on Aussie GDP data.
• Australia Q2 GDP rose past market consensus on YoY and QoQ.
• Market sentiment dwindles amid mixed catalysts, US data eyed.

AUD/USD pares early Asian session losses while picking up bids to 0.7315 at the latest on Wednesday. The Aussie pair recently cheered Australia’s second-quarter GDP release but mixed concerns over the market sentiment and pre-US data anxiety challenge the bulls.

Australia’s Q2 GDP rose past 0.5% QoQ forecast to 0.7%, versus 1.8% prior. The annualized figures also crossed the market consensus of 9.2% with a 9.6% level.

Read: Breaking: Australian Q2 GDP beats estimates, lifts AUD towards highs

Even so, virus concerns and market sentiment challenge the bulls. Although Australia’s second-most populous state registered record top covid infections, the nation could remain below the previous record of 1,380 as numbers from the largest population-containing state, New South Wales (NSW) eased. It’s worth noting that Australia’s death count is again at the recent top of six and probes the AUD/USD buyers.

Elsewhere, New Zealand reports a spike in daily covid cases by 75 after a run of lower cases in the last few days. Furthermore, the UK and China report softer covid count whereas the death toll is the worrisome concern in the West.

Other than the virus woes, chatters over the European Central Bank’s (ECB) bond purchase cut, due to strong inflation data from the bloc and indecision over the Fed’s next moves amid mixed data also weigh on the market sentiment.

That said, the preliminary reading of the Eurozone Consumer Price Index (CPI) for August jumped 3.0% YoY, the highest in over a decade whereas the US Housing Price Index for June eased but the S&P/Case Shiller Home Price Index jumped to 19.1% YoY during the stated month. Further, the August month’s Conference Board measure of Consumer Confidence fell to 113.8 from 125.1 whereas the Chicago Purchasing Managers’ Index (PMI) for August dropped to 66.8 versus 68.0 expected and 73.4 prior.

For Australia, the AiG Performance of Mfg Index for August eased to 51.6 from 60.8 whereas the Commonwealth Bank Manufacturing PMI jumped past 51.7 expected and prior to 52.00 for the stated month.

Amid these plays, the US 10-year Treasury yields snapped a two-day downtrend to add 2.3 basis points (bps) to 1.307% whereas the US Dollar Index (DXY) dropped to the lowest since August 04, becomes consolidating gains to 92.65 by the end of Tuesday’s North American trading session. Following that, the S&P 500 Futures rise 0.15% by the press time whereas the US 10-year Treasury yields also extend the previous day’s upside to 1.317%, up 2.0 bps.

Although the risk catalysts will be more important for DXY traders, the US ADP data and ISM Manufacturing PMI for August can provide the near-term market direction ahead of Friday’s jobs report.

Read: ISM Manufacturing PMI Preview: Why it could be the trigger for a big greenback comeback

Technical analysis

AUD/USD needs to defend the previous day’s upside break of a three-month-old descending trend line and 20-DMA, around 0.7300–7295, to aim for August month’s peak near 0.7430.