The aussie is sitting higher as traders brush aside the softer risk mood and weaker yuan to focus on the movement in rates instead
AUD/USD is back up near the highs for the day as the aussie pushes gains to start the session amid a sharp repricing in the rates market after the better jobs report earlier.
Aussie bond yields have notably climbed and we're also seeing a significant repricing in terms of rate cut odds ahead of the 4 February RBA meeting:
Odds of a 25 bps rate cut on 4 February have been marked down to just ~27% from ~56% yesterday as the market is more convinced that the RBA will now stay pat after a bit of a drop in the unemployment rate in the jobs report earlier today.
As such, the aussie is keeping higher with AUD/USD now back above its 100-hour MA (red line). However, there is key resistance resting nearby with the 200-hour MA (blue line) @ 0.6883 but also the 200-day moving average @ 0.6881.
Those will be key levels that buyers need to try and break in order to try and get back above 0.6900 to test last week's high @ 0.6934.
Looking beyond the rates equation, there are still some headwinds that the aussie needs to try and navigate through. Risk sentiment remains soft and with the Chinese yuan also weakening past 6.93 against the dollar, there is room for spillovers to the aussie.
Just keep that in mind as the pair attempts to knock on the door of the key resistance levels pointed out above.
