AUD/USD approaches 0.6900 amid trader’s anxiety ahead of RBA Interest Rate hike
|- AUD/USD defends the week-start optimism, seesaws inside an immediate range of late.
- Softer Aussie data, firmer US Treasury yields join pre-RBA caution to test recovery moves.
- US Factory Orders, Sino-American trade headlines and covid news also need attention for clear guide.
AUD/USD holds onto the week-start recovery on its way to battle the key 0.6900 hurdle, around 0.6875 by the press time of Tuesday’s Asian session. The quote’s firmer performance could be linked to the market’s cautious optimism, as well as the softer US dollar. However, the bulls appear cautious ahead of the key Reserve Bank of Australia (RBA) Interest Rate Decision.
That said, the US Dollar Index (DXY) struggles to defend the two-day uptrend to 105.00 as buyers retreat from a two-week top.
In doing so, the greenback bulls appear to have tracked firmer Treasury yields. It’s worth noting that the benchmark 10-year Treasury bond yields keep the previous U-turn from a one-month low at around 2.92%, up by three basis points (bps) from Friday’s closing.
Although the US holiday failed to offer much to cheer for the bond bears, firmer prints of the German Bunds and chatters surrounding the US discussion on removing the Trump-era tariffs on China seemed to have favored the US Treasury yields.
The yields on the 10-year German Bund rose over 10 basis points to 1.32% at the latest.
Talking about the Aussie data, the AiG Performance of Construction Index for June also eased to 46.2, below 50.4 prior, whereas S&P global Composite PMI and Services PMI confirmed the 52.6 initial forecasts for June.
Meanwhile, the recession fears and China’s covid woes join Russia’s claim of winning total control in Lysychansk, not to forget the pre-RBA anxiety, to probe the pair buyers.
Moving on, US Factory Orders for May, expected 0.5% versus 0.3%, could entertain AUD/USD traders but major attention should be given to the risk catalysts, as well as the pre-NFP sentiment, not to forget the full markets’ reaction to the recently firmer bond yields.
It should be noted that the RBA’s 0.50% rate hike is already given and appeared to have been priced in, which in turn highlights Tuesday’s RBA Rate Statement for fresh impulse. Should the policy statement hint at further rate increases, the AUD/USD may extend the latest run-up, at least for the for time being.
Also read: Reserve Bank of Australia Preview: Will a 50 bps rate hike rescue AUD bulls?
Technical analysis
A convergence of the 10-DMA and the 13-day-old descending trend line, around 0.6900, challenges buyers. Even so, a downward sloping support line from late January, near 0.6755 by the press time, could restrict short-term declines of the AUD/USD pair.
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.