AUD/USD retreats from session highs, clings to modest gains above 0.7300

AUD/USD retreats from session highs, clings to modest gains above 0.7300

After dropping to its lowest level since late August at 0.7273 on Thursday, the AUD/USD stayed relatively quiet during the Asian trading hours on Friday but managed to stage a rebound in the early European session. Nevertheless, the pair lost its recovery momentum near 0.7320 and erased a portion of its daily gains. As of writing, the pair was still up 0.22% on the day at 0.7305.

DXY rally loses steam on Friday

Rising US Treasury bond yields and the upbeat Retail Sales data, which showed an unexpected increase in August, provided a boost to the greenback on Thursday. Later in the session, the University of Michigan will release the preliminary Consumer Sentiment Index data for September. Investors expect a modest improvement to 72.2 from 70.3 in August. 

The market reaction to Retail Sales data suggests that a better-than-expected consumer confidence report could help the USD end the week on a strong note, forcing AUD/USD to turn south and vice versa.

In the meantime, US stock index futures are down 0.2% on the day. In case Wall Street's main indexes remain on the back foot ahead of the weekend, the USD is likely to continue to outperform its risk-sensitive rivals.

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