AUD/USD spikes to 3-week highs, nearing 0.7800 handle

   •  RBA’s FSR helps offset disappointing Chinese trade balance data.
   •  Subdued USD demand/US bond yields provide an additional boost.

The AUD/USD pair finally broke out of its 2-day old trading range and moved past 100-day SMA barrier to currently trade around one-month high, just below the 0.7800 handle.

After two days of the directionless move, the pair caught some fresh bids on Friday after the RBA Financial Stability Report (FSR) stated that the risks from high-household debt and aggressive bank lending practices have slightly abated of late.

The upbeat tone helped offset disappointing Chinese trade balance data, coming in to show a deficit on the back of a slump in exports, with a subdued US Dollar price action and weaker tone around the US Treasury bond yields supportive of the up-move.

This coupled with a mildly positive sentiment around commodity space, especially copper, provided an additional boot to the commodity-linked currency Australian Dollar and helped the pair to move back above 100-day SMA hurdle. 

Traders now look forward to the US economic docket, featuring the release of Prelim UoM Consumer Sentiment and JOLTS Job Openings data, for some short-term impetus on the last trading day of the week. 

Technical levels to watch

Any subsequent up-move is likely to confront resistance at the very important 200-day SMA hurdle, currently near the 0.7810-15 region, above which the momentum could further get extended towards 0.7875 supply zone. 

On the flip side, the 0.7760-55 area now becomes an immediate support to defend, which if broken might prompt some long-unwinding trade and drag the pair back towards 0.7715-10 support area en-route the 0.7700 handle.