- AUD/USD grinds near intraday high after rising the most in a month, snapping two-day downtrend.
- Risk-on mood, PBoC inaction and hopes of hawkish RBA Minutes underpin Aussie pair’s run-up.
- Hopes of avoiding US default, softer US data favor sentiment and weigh on US Dollar of late.
- RBA Minutes, China/US Retail Sales eyed for immediate directions but US debt ceiling talks are the key.
AUD/USD grinds near 0.6700 as the bulls await the Reserve Bank of Australia (RBA) Meeting Minutes on early Tuesday. In doing so, the Aussie pair also benefits from the market’s cautious optimism due to the US debt ceiling hopes, as well as upbeat signals from the People’s Bank of China (PBOC) and likely hawkish statements from the RBA.
It’s worth noting that the Aussie pair rose the most in one month the previous day while printing the first daily gains in three amid broad US Dollar weakness, mainly due to the market’s hopes of overcoming the US default and downbeat US data.
On Monday, the largest fall in the US NY Empire State Manufacturing Index since April 2020, to -31.8 for May, joined mixed Fed talks to also weigh on the US Dollar. That said, Atlanta Fed President Raphael Bostic told CNBC on Monday that there is still a long distance to go on inflation and added that they may have to "go up on rates," as reported by Reuters. Bostic further noted that he will not be looking at cutting rates until well into 2024 in his baseline scenario. On the contrary, Chicago Federal Reserve Bank President Austan Goolsbee said in an interview with CNBC on Monday that a lot of impact of rate hikes is still in the pipeline. Furthermore, Minneapolis Fed President Neel Kashkari stated that signaled that the Fed has a long way to go to get inflation to 2.0%.
Elsewhere, the White House announced a meeting between President Joe Biden and Republican House of Representatives Speaker Kevin McCarthy to overcome the looming US default. Ahead of the event, the US policymakers appear somewhat optimistic about extending the debt ceiling limit before the June expiry.
People's Bank of China (PBOC) keeps the one-year Medium-term Lending Facility (MLF) rates unchanged at 2.75%, per the latest update. The news joins the PBOC’s highest daily USD/CNY fix since March 10 to propel the AUD/USD price. Additionally, the Chinese central bank also released its quarterly economic report stating that China's economy isn’t experiencing deflation and that economic growth is set to rebound sharply.
Moving on, the RBA Minutes need to defend its latest hawkish surprise to keep the AUD/USD bulls on the table. That said, the latest quarterly Statement of Monetary Policy (SoMP) from the Aussie central bank isn’t too impressive and hence risks of a pullback on the event can’t be ruled out.
Additionally, China’s Retail Sales and Industrial Production for April, as well as the US Retail Sales for the said month, will precede the US debt ceiling talks, scheduled for 19:00 GMT, to direct short-term AUD/USD moves.
Technical analysis
A clear bounce off the 12-day-old ascending support line directs AUD/USD bulls toward the 200-DMA hurdle of around 0.6720.
Information on these pages contains forward-looking statements that involve risks and uncertainties. Markets and instruments profiled on this page are for informational purposes only and should not in any way come across as a recommendation to buy or sell in these assets. You should do your own thorough research before making any investment decisions. FXStreet does not in any way guarantee that this information is free from mistakes, errors, or material misstatements. It also does not guarantee that this information is of a timely nature. Investing in Open Markets involves a great deal of risk, including the loss of all or a portion of your investment, as well as emotional distress. All risks, losses and costs associated with investing, including total loss of principal, are your responsibility. The views and opinions expressed in this article are those of the authors and do not necessarily reflect the official policy or position of FXStreet nor its advertisers. The author will not be held responsible for information that is found at the end of links posted on this page.
If not otherwise explicitly mentioned in the body of the article, at the time of writing, the author has no position in any stock mentioned in this article and no business relationship with any company mentioned. The author has not received compensation for writing this article, other than from FXStreet.
FXStreet and the author do not provide personalized recommendations. The author makes no representations as to the accuracy, completeness, or suitability of this information. FXStreet and the author will not be liable for any errors, omissions or any losses, injuries or damages arising from this information and its display or use. Errors and omissions excepted.
The author and FXStreet are not registered investment advisors and nothing in this article is intended to be investment advice.
Recommended content
Editors’ Picks
EUR/USD stays below 1.1100, looks to post weekly losses
EUR/USD continues to trade in a narrow range below 1.1100 and remains on track to end the week in negative territory. Earlier in the day, monthly PCE inflation data from the US came in line with the market expectation, failing to trigger a reaction.
GBP/USD struggles to find a foothold, trades near 1.3150
GBP/USD stays on the back foot and trades in negative territory at around 1.3150 on Friday. The US Dollar holds its ground following the July PCE inflation data and doesn't allow the pair to stage a rebound heading into the weekend.
Gold retreats toward $2,500 ahead of the weekend
Gold stays under modest bearish pressure and declines toward $2,500 in the American session on Friday. The 10-year US Treasury bond yield edges higher toward 3.9% after US PCE inflation data, causing XAU/USD to stretch lower.
Week ahead – Investors brace for NFP amid Fed rate cut speculation
Here comes another NFP week, with investors eagerly awaiting the results as they try to discern the size and pace of the Fed’s forthcoming rate cuts. The weaker than expected July numbers triggered market turbulence, instilling fears about a potential recession in the US.
Easing Eurozone inflation to back an ECB rate cut in September Premium
Eurostat will publish the preliminary estimate of the August Eurozone Harmonized Index of Consumer Prices on Friday, and the anticipated outcome will back up the case for another European Central Bank interest rate cut when policymakers meet in September.
Moneta Markets review 2024: All you need to know
VERIFIED In this review, the FXStreet team provides an independent and thorough analysis based on direct testing and real experiences with Moneta Markets – an excellent broker for novice to intermediate forex traders who want to broaden their knowledge base.