AUD/USD bulls flirt with 0.6700 ahead of RBA Minutes, China/US data amid US debt ceiling jitters
|- 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.
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