AUD/USD climbs back to $0.7930 as the market mood improves, ahead of Lowe's speech

• The AUD/USD is gradually advancing higher, returning to balanced on the day.
• The rise resumes as US stocks extend their gains, weighing on the US Dollar.
• A speech by RBA Governor Phillip Lowe is set to determine the next moves.

The AUD/USD gradually recovered from the lows of the day at $0.7892 and reached $0.7930. It still trades below the peak of $7966 that was seen late in the Asian session. 

The driver of the move to the upside is an improved market sentiment. US shares are advancing after a slow start. The S&P500 is around 1% higher on the day. The risk-on sentiment is favorable for the Australian dollar. 

Economic indicators from the US and Australia

The important economic indicator coming out of the US was positive. The Producer Price Index rose by 2.7% YoY in January, above 2.5% that was forecast. Core PPI increased by 2.2% YoY, also beyond early expectations. Higher inflation at factory gates implies an increase in consumer prices further down the line. Other US indicators were mixed. Industrial Output declined by 0.1% against expectations for advancing by 0.2%. Weekly Jobless Claims met expectations at 230,000. 

The Governor of the Reserve Bank of Australia, Phillip Lowe, will deliver a speech early in the Australian morning. He has the opportunity to respond to the jobs report. Australia gained 16,000 jobs in January, a tad above 15,000 that was expected, but lower than 33,500 positions gained in December. The Unemployment Rate remained unchanged at 5.5%, as projected. 

Governor Lowe may also address the renewed strength of the Australian Dollar. The RBA reiterated its stance that a higher exchange rate dampens inflation. 

The US economic calendar features a set of indicators: Housing Starts, Building Permits and the Consumer Sentiment from the University of Michigan, the last significant publication for the week.

AUD/USD Technical Levels

The peak of the day at $0.7966 is the immediate resistance line. It was also a swing low on January 23rd. A move above this level leads the way to the round number of $0.800. Further above, the double-top at $0.8130 is of high importance.

On the downside, the swing low of 0.7773 seen on Wednesday is notable on the downside. A break below this level may see the pair falling toward 0.7728 (the Nov. high), and then $0.7625 (Oct. 27 low).