- AUD/USD picks up bids to refresh intraday high, extends week-start recovery.
- RBA praises yield targeting method and mentioned reputational damage as it ended.
- Market sentiment remains mixed, US holiday allowed European/UK shares to improve.
- RBA Meeting Minutes, speech from Governor Lowe gain major attention ahead of the full markets.
AUD/USD renews intraday high around 0.6960, extending the daily gains as market sentiment remains cautiously optimistic ahead of multiple catalysts from the Reserve Bank of Australias (RBA), up for publishing on early Tuesday.
The Aussie pair’s latest gains could be linked to the absence of the US traders, due to the Juneteenth holiday, as well as the RBA’s comments on the success of the yield targeting method.
RBA conceded the end of yield target was damaging during early Tuesday morning in Asia. The Aussie central bank also mentioned, “Yield target successfully reinforced the bank's forward guidance about the cash rate.”
Also read: RBA: Yield target successfully reinforced the bank's forward guidance about the cash rate
It’s worth noting that the RBA surprised markets with a 50 basis points (bps) rate hike during its latest monetary policy meeting and the tide for a rate lift isn’t down yet. Hence, the AUD/USD traders will be more interested in reading about the future rate actions and/or possible monetary policy moves discussed by the policymakers. The same highlights today’s RBA Meeting Minutes for the last meeting. Also important will be a speech from RBA Governor Philip Lowe.
On the other hand, the US Dollar Index (DXY) began the week on a negative side as an off in the US markets allowed stocks/bunds in Europe and the UK to consolidate recent moves. Even so, fears of monetary policy aggression and economic fears challenged the market’s optimism amid a lackluster day.
Moving on, RBA’s Lowe and Meeting Minutes will be crucial for the AUD/USD traders ahead of the second-tier US data. Additionally, chatters surrounding the likely US tax relief to China and covid may also entertain the pair traders. Above all, Federal Reserve (Fed) Chairman Jerome Powell’s Testimony on the bi-annual Monetary Policy Report, on Wednesday and Thursday, will be important for clear directions.
Technical analysis
AUD/USD grinds higher between the weekly support line and the 10-DMA, respectively around 0.6930 and 0.7000.
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 treads water just above 1.0400 post-US data
Another sign of the good health of the US economy came in response to firm flash US Manufacturing and Services PMIs, which in turn reinforced further the already strong performance of the US Dollar, relegating EUR/USD to the 1.0400 neighbourhood on Friday.
GBP/USD remains depressed near 1.2520 on stronger Dollar
Poor results from the UK docket kept the British pound on the back foot on Thursday, hovering around the low-1.2500s in a context of generalized weakness in the risk-linked galaxy vs. another outstanding day in the Greenback.
Gold keeps the bid bias unchanged near $2,700
Persistent safe haven demand continues to prop up the march north in Gold prices so far on Friday, hitting new two-week tops past the key $2,700 mark per troy ounce despite extra strength in the Greenback and mixed US yields.
Geopolitics back on the radar
Rising tensions between Russia and Ukraine caused renewed unease in the markets this week. Putin signed an amendment to Russian nuclear doctrine, which allows Russia to use nuclear weapons for retaliating against strikes carried out with conventional weapons.
Eurozone PMI sounds the alarm about growth once more
The composite PMI dropped from 50 to 48.1, once more stressing growth concerns for the eurozone. Hard data has actually come in better than expected recently – so ahead of the December meeting, the ECB has to figure out whether this is the PMI crying wolf or whether it should take this signal seriously. We think it’s the latter.
Best Forex Brokers with Low Spreads
VERIFIED Low spreads are crucial for reducing trading costs. Explore top Forex brokers offering competitive spreads and high leverage. Compare options for EUR/USD, GBP/USD, USD/JPY, and Gold.