AUD/USD approaches 0.6670 key support with eyes on RBA, US NFP

AUD/USD struggles to extend the previous weekly gains as it prints minor losses around 0.6680 during early Monday morning in the Asia-Pacific region.

Markets brace for a dovish hike from the Reserve Bank of Australia (RBA) after downbeat inflation and Retail Sales data. However, the RBA policymakers defended their hawkish moves and hence the Aussie pair traders are more cautious. Also challenging the risk-barometer pair is the downbeat mood and the presence of the US jobs report for March, up for publishing on Friday.

The last week’s downbeat Aussie Consumer Price Index (CPI) and Retail Sales data raised concerns about the RBA’s last rate hike and flag the fears of the AUD/USD bear’s return. However, the softer US data and receding hawkish concerns from the Federal Reserve (Fed), not to forget the presence of the US Nonfarm Payrolls (NFP) release, keeps the Aussie pair traders on their toes.

It’s worth mentioning that the final readings of Australia’s S&P Global Manufacturing PMI for March came in firmer to 49.1 versus 48.7 flash estimations.

On Friday, the US Core Personal Consumption Expenditures (PCE) Price Index, the Fed’s preferred gauge of inflation, for February declined to 4.6% YoY from 4.7% expected and prior. On a monthly basis, Core PCE inflation rose 0.3% while easing below the market expectation of 0.4% and a downwardly revised 0.5% previous reading. Further, the Chicago PMI reading for March came in stronger than expected at 43.8 while the final readings of the University of Michigan's (UoM) Consumer Confidence Index dropped to 62.0 in March, versus 63.4 flash estimations and 63.2 market forecasts. Current Economic Conditions fell from 70.7 in February to 66.3 and the Index of Consumer Expectations declined from 64.7 to 59.2.

It should be noted that the global central bankers and policymakers appear successfully routed the markets off the banking crisis as the bank shares have recently recovered after witnessing a bloodbath during mid-March, led by the Silicon Valley Bank’s (SVB) fallout.

Alternatively, a surprise output cut from the Organization of the Petroleum Exporting Countries (OPEC) and allies led by Russia, known collectively as OPEC+, joins fresh fears of the US-China tension weighing on the AUD/USD prices. On Friday, China's top diplomat Wang Yi said that the US and China relations are facing challenges and difficulties. “I urge the US to stop suppression, decoupling is wrong,” Wang added.

Amid these plays, Wall Street closed on the positive side but the yields are down, despite marking weekly gains.

Looking forward, AUD/USD traders may pay attention to US ISM Manufacturing PMI for March for intraday directions. However, Tuesday’s RBA and Friday’s US jobs report are the key events to watch for this week.

Technical analysis

An upward-sloping support line from March 10, around 0.6670 by the press time, restricts the short-term downside of the AUD/USD price.