AUD/USD climbs back above 0.6800 mark amid modest USD weakness, NFP awaited

AUD/USD gains positive traction and reverses a part of the overnight slide to a multi-week low.

The USD moves away from a two-decade high and turns out to be a key factor lending support.

Aggressive Fed rate hike bets to limit the USD losses and cap the pair ahead of the NFP report.

The AUD/USD pair attracts some buying on Friday and recovers a part of the previous day's losses to the 0.6770 area, or the lowest level since July 18. The pair builds on its steady intraday ascent and moves back above the 0.6800 mark, hitting a fresh daily high during the first half of the European session.

The US dollar edges lower and retreats further from a two-decade high touched on Thursday, which, in turn, offers some support to the AUD/USD pair. A softer tone surrounding the US Treasury bond yields keeps the USD bulls on the defensive amid some repositioning trade ahead of the US monthly jobs data. Apart from this, signs of stability in the financial markets further undermine the safe-haven buck and benefit the risk-sensitive aussie.

That said, growing recession fears, economic headwinds stemming from fresh COVID-19 lockdowns in China and the war in Ukraine should cap any optimistic moves. Furthermore, expectations that the Fed will continue to tighten its monetary policy to tame inflation should act as a tailwind for the US bond yields and lend support to the greenback. This, in turn, warrants caution before placing aggressive bullish bets around the AUD/USD pair.

It is worth mentioning that the markets are pricing in a supersized 75 bps rate hike at the September FOMC meeting and the bets were reaffirmed by the recent hawkish remarks by several Fed officials. Traders now look to the US NFP report, which will provide a fresh insight into the economy's health and influence the USD price dynamics. This, in turn, will drive the AUD/USD pair ahead of the Reserve Bank of Australia (RBA) meeting next week.

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WTI falls back under $100 with Russo-Ukraine peace talk optimism, crude oil reserve releases in focus

Oil was trading with a bearish bias on Friday amid Russo-Ukraine peace talk optimism and crude oil reserve release focus. 

WTI dipped below $100 per barrel and hit fresh weekly lows sub-$98.00, with bears eyeing March lows in the $93.00s.

Oil prices have continued to trade with a bearish bias on Friday, with front-month WTI futures dipping to fresh weekly lows under $98.00 as traders digest the recent announcement of a major crude oil reserve release in the US (1M barrels per day for six months) and a further tightening of lockdown measures in major Chinese economic zone Shanghai. Recent positive commentary from Russian Foreign Minister Sergey Lavrov regarding progress in Russo-Ukraine peace talks is also weighing on oil as geopolitical risk premia is further unwound. Having found resistance at its 21-Day Moving Average (DMA) in the $108 area earlier in the week, WTI is now probing its 50DMA to the downside in $98.00s.

International Energy Agency member nations recently commenced a meeting and the speculation is that other major oil consumer nations might also announce crude oil reserve releases alongside the US. US President Joe Biden said this could amount to a further 30-50M barrels of immediate supply. If confirmed, further newsflow pertaining to crude oil reserve releases could inject further bearishness into crude oil markets, with a test of March lows in the $93.00s on the cards.

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