- AUD/USD turned higher on Thursday on a softer USD..
- The cautious market mood could limit gains for the risk sensitive Australian dollar.
- US macro data in focus.
- AUD/USD held gains in the early European session, just below daily highs.
After hitting a two-and-a-half-year high of 0.7485 in the previous session, the pair eased back before regaining some positive momentum on the back of a softer US dollar. The move higher lacked follow through. Doubts are growing over whether Republicans and Democrats can agree over a stimulus package. US lawmakers approved a stopgap government funding bill on Wednesday but failed to agree over the latest stimulus proposal.
As result, risk sentiment declined which could limit demand for the perceived riskier Aussie dollar. Dip-buying around the AUD/USD suggests some strength in the price indicating the one-month-old bullish trend could have further to run.
Looking ahead US consumer inflation figures and Initial Weekly Jobless Claims will be in focus.