AUD/USD: Flirts with 0.7300 ahead of RBA minutes, China data dump
|- AUD/USD extends Monday’s recovery moves ahead of the key day.
- Market sentiment stays positive amid vaccine hopes, confidence in global central banks.
- Recovery in Aussie new cases confronts Sino-American tension, Brexit fears.
- RBA minutes can reiterate bearish bias, China data likely to recover in August.
AUD/USD stays positive around 0.7290 amid the early Tuesday morning in Asia. In doing so, the aussie pair keeps the previous day’s gains amid market optimism. However, bulls are chained while waiting for important data/events.
Trust on central bankers favors trading sentiment…
Although the US challenges AstraZeneca’s restart of vaccine trials, which dimmed the early week’s positive mood, market players do believe that the central bankers would do their best to take out the respective economies from the pandemic-led woes. It should additionally be noted that the coronavirus (COVID-19) new cases from Australian hotspots dropped to three months’ low during the weekend and favored upbeat trading sentiment amid a light calendar day.
On the contrary, fears of a no-deal Brexit, due to the Tory government’s push for Internal Market Bill, join the US-China tussle to question the bulls.
While portraying the market mood, the Wall Street benchmark flashed above 1.0% gains each while the US 10-year Treasury yields also added one basis points (bps) to close Monday’s trading around 0.67%.
Looking forward, Minutes of the RBA’s September month monetary policy meeting will precede China’s Industrial Production and Retail Sales data for the previous month to direct immediate AUD/USD moves.
Despite extending the Term Lending Facility and keeping the benchmark rate unchanged at 0.25%, the Reserve Bank of Australia (RBA) said, the economic downturn “is not as severe as earlier expected and a recovery is now underway in most of Australia.” As a result, traders will closely observe the statement for any positive signals to extend the latest recovery moves. On the other hand, China’s Retail Sales can overcome the previous month’s 1.1% declines with a 0.0% forecast whereas Industrial Production may rise 5.1% from 4.8%.
Given the upbeat expectations from the scheduled data/events, AUD/USD may stretch the recent pullback. However, a slew of major risk catalysts has been playing loud off-late, which in turn can surprise trades and hence warrant cautious moves.
Technical analysis
A clear break of 0.7300 will enable the bulls to aim for 0.7340/45 ahead of challenging 0.7400 round-figures and August month’s peak surrounding 0.7415. Meanwhile, 21-day SMA near 0.7260 offers immediate support to the quote before the monthly bottom close to 0.7190.
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