AUD/USD: Bulls cheer risk-on sentiment above 0.6500, RBA minutes in focus
|- AUD/USD catches a breather above 0.6500 after positing biggest gains in seven weeks.
- Optimism surrounding virus vaccine, hopes of increase in China’s demand superseded US-China tussle.
- Signals of additional easing from Fed, BOE and Europe also contribute to the market’s optimism.
- RBA minutes become the immediate catalysts while virus headlines, US/China news can keep traders busy.
AUD/USD bulls keep the reins, despite catching a breather, as the pair seesaws around 0.6525/20 at the start of Tuesday’s Asian session. The pair registered the biggest gains, of around 1.7% daily, in seven weeks the previous day.
Virus medicine revives markets, central bankers/commodities support recovery…
Talks of Moderna’s early success in coronavirus vaccine trials propelled the market’s risk-on sentiment at the week’s start. The optimism also took clues from signals of further easing by the US Federal Reserve, the Bank of England (BOE) and Europe.
Also read: Coronavirus update: US death toll crosses 90K, Pres. Trump says he takes hydroxychloroquine everyday
Further, comments from Chinese President Xi Jinping that China’s COVID-19 vaccine development and deployment will be made a public good when it is available and a pledge to provide $2 billion over two years to support the fight against the virus also boosted the risk-positive environment.
Additionally, the Aussie pair also benefited from the upbeat performances of oil and gold prices. The expectations that China is back to pre-virus breakout levels of oil consumption fuelled energy prices whereas Gold also cheered the upcoming wave of easy money to the multi-year high.
It should also be noted that these positive catalysts weigh over the early week headlines concerning the US-China tussle and helped Wall Street to post noticeable gains by Monday’s close. Also portraying the market’s risk-on mood could be the strong run-up by the US Treasury yields and bunds.
Looking forward, RBA minutes, up for publishing at 01:30 GMT on Tuesday, will be the immediate catalyst to watch. With the Statement of Monetary Policy (SOMP) already out and loud, the minutes are less likely to gain any major attention. However, traders will be interested in seeking clues of further easing and economic performance due to the virus in the statement.
Following the RBA minutes, US housing market figures and the Fed Chair Powell’s testimony will be the key to watch.
Technical analysis
With a daily closing beyond 100-day SMA for the first time since late-January, AUD/USD seems to be ready to challenge April tops nearing 0.6570. Though, 0.6600 round-figure, 200-day SMA near 0.6665 and March high close to 0.6685/90 can question the bulls afterward. Meanwhile, pair’s drop below 100-day SMA level of 0.6512 will need a clear break below 0.6500 round-figure to recall Friday’s low of 0.6401.
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