- AUD/USD grinds higher after rising the most in two weeks.
- Softer Australia Retail Sales fail to push back buyers amid broadly softer US Dollar, risk-on mood.
- Receding fears of banking crisis, mixed US data weigh on the greenback.
- Softer Australia Monthly CPI can challenge RBA’s rate hike and probe the Aussie pair buyers.
AUD/USD pokes 0.6700 mark as bulls await the key Australian inflation data on early Wednesday, after a two-day uptrend. It’s worth noting that the market’s reassessments of the baking risk and the broad US Dollar weakness allowed the Aussie pair to ignore downbeat Australia Retail Sales while posting the biggest daily gain in two weeks the previous day.
That said, Australia’s seasonally adjusted Retail Sales growth for February came in at 0.2% versus 0.4% market forecasts and 1.9% prior.
On the other hand, the US Conference Board (CB) Consumer Confidence rose to 104.2 in March, versus 101.0 expected and an upwardly revised prior figure of 103.4. Further, US Housing Price Index rose 0.2% MoM in January versus -0.6% expected and -0.1% prior while the S&P/Case-Shiller Home Price Indices matched 2.5% YoY forecasts for the said month compared to 4.5% previous readings.
It’s worth noting, however, that Wall Street closed with mild losses and the US Treasury bond yields managed to recover but the US Dollar Index (DXY) failed to improve as hawkish Fed bets eased. That said, CME’s FedWatch Tool suggests market players placing near 65% bets on another 0.25% rate hike for May 03 meeting.
Talking about the risks, the US and EU policymakers’ rush to defend respective banks supersede the criticism by some of their diplomats as well as the much-debated $5.4 million Credit Default Swap (CDS) trade of Deutsche Bank.
At home, Australia’s Assistant Treasurer and Minister for Financial Services Stephen Jones tried to restore the market sentiment in the Aussie banks early Tuesday while speaking on local radio. The policymaker said, “Australia’s banking system is resilient,” while also adding that Australia's financial system is well-equipped to deal with challenges in the global economy.
In an interview with CNBC on Tuesday, US House Speaker Kevin McCarthy said that there was no need for blanket insurance on all bank deposits "at this moment in time," as reported by Reuters. On the same line, Jose Manuel Campa, Chairman of the European Banking Authority (EBA), warned in the German Handelsblatt newspaper, "The risks in the financial system remain very high." The policymaker also added that the rising interest rates continued to weigh on financial markets.
Moving on, the firmer sentiment may help the AUD/USD pair grind higher ahead of Australia’s Monthly Consumer Price Index (CPI), expected 7.1% YoY versus 7.4% prior, but a likely disappointment from the data can weigh on the Aussie pair.
Technical analysis
A two-week-old bullish channel keeps AUD/USD buyers hopeful unless the quote drops below the 0.6645 support.
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