AUD/USD: Bulls cheer risk-on sentiment above 0.6500, RBA minutes in focus

AUD/USD catches a breather above 0.6500 after positing biggest gains in seven weeks.
Optimism surrounding virus vaccine, hopes of increase in China’s demand superseded US-China tussle.
Signals of additional easing from Fed, BOE and Europe also contribute to the market’s optimism.
RBA minutes become the immediate catalysts while virus headlines, US/China news can keep traders busy.

Anil Panchal FXStreet

AUD/USD bulls keep the reins, despite catching a breather, as the pair seesaws around 0.6525/20 at the start of Tuesday’s Asian session. The pair registered the biggest gains, of around 1.7% daily, in seven weeks the previous day.

Virus medicine revives markets, central bankers/commodities support recovery…

Talks of Moderna’s early success in coronavirus vaccine trials propelled the market’s risk-on sentiment at the week’s start. The optimism also took clues from signals of further easing by the US Federal Reserve, the Bank of England (BOE) and Europe.

Also read: Coronavirus update: US death toll crosses 90K, Pres. Trump says he takes hydroxychloroquine everyday

Further, comments from Chinese President Xi Jinping that China’s COVID-19 vaccine development and deployment will be made a public good when it is available and a pledge to provide $2 billion over two years to support the fight against the virus also boosted the risk-positive environment.

Additionally, the Aussie pair also benefited from the upbeat performances of oil and gold prices. The expectations that China is back to pre-virus breakout levels of oil consumption fuelled energy prices whereas Gold also cheered the upcoming wave of easy money to the multi-year high.

It should also be noted that these positive catalysts weigh over the early week headlines concerning the US-China tussle and helped Wall Street to post noticeable gains by Monday’s close. Also portraying the market’s risk-on mood could be the strong run-up by the US Treasury yields and bunds.

Looking forward, RBA minutes, up for publishing at 01:30 GMT on Tuesday, will be the immediate catalyst to watch. With the Statement of Monetary Policy (SOMP) already out and loud, the minutes are less likely to gain any major attention. However, traders will be interested in seeking clues of further easing and economic performance due to the virus in the statement.

Following the RBA minutes, US housing market figures and the Fed Chair Powell’s testimony will be the key to watch.

Technical analysis

With a daily closing beyond 100-day SMA for the first time since late-January, AUD/USD seems to be ready to challenge April tops nearing 0.6570. Though, 0.6600 round-figure, 200-day SMA near 0.6665 and March high close to 0.6685/90 can question the bulls afterward. Meanwhile, pair’s drop below 100-day SMA level of 0.6512 will need a clear break below 0.6500 round-figure to recall Friday’s low of 0.6401.

Additional important levels

Overview
Today last price	0.6525
Today Daily Change	111 pips
Today Daily Change %	1.73%
Today daily open	0.6414

Trends
Daily SMA20	0.6436
Daily SMA50	0.6272
Daily SMA100	0.6517
Daily SMA200	0.6667

Levels
Previous Daily High	0.6474
Previous Daily Low	0.6401
Previous Weekly High	0.6562
Previous Weekly Low	0.6401
Previous Monthly High	0.657
Previous Monthly Low	0.598
Daily Fibonacci 38.2%	0.6429
Daily Fibonacci 61.8%	0.6446
Daily Pivot Point S1	0.6385
Daily Pivot Point S2	0.6357
Daily Pivot Point S3	0.6312
Daily Pivot Point R1	0.6458
Daily Pivot Point R2	0.6503
Daily Pivot Point R3	0.6531

Author

Anil Panchal

FXStreet

Anil Panchal has nearly 15 years of experience in tracking financial markets. With a keen interest in macroeconomics, Anil aptly tracks global news/updates and stays well-informed about the global financial moves and their implications.

AUD/USD flirts with 0.7000, lowest since early August amid bullish USD

AUD/USD hits a fresh low since early August during the Asian session on Friday and looks vulnerable near 0.7000 after breaking below the 200-day SMA overnight. Against the backdrop of the hawkish Fed, a two-day rally in oil prices revives inflation fears and continues to push US bond yields to multi-year highs. Adding to this, geopolitical risks lift the US Dollar to a two-month high, overshadowing RBA rate hike bets and weighing on the pair.

USD/JPY pulls back from three-week high after failing near 159.00

USD/JPY edges lower during the Asian session on Friday, stalling its recent strong move to a three-week high of 159.00 as Japanese Yen bears turn cautious amid intervention fears. Meanwhile, the US Dollar retains a strong bullish undertone as the Fed's hawkish outlook and oil-driven inflation fears continue to push US bond yields to multi-year peaks. Furthermore, the BoJ's dovish rate hike last week might cap JPY and support spot prices.

Gold treads water below $4,300

Gold grabs some buying attention and advances marginally at the end of the week, partially retracing the weekly decline, although it is still navigating below the key $4,300 mark per troy ounce. The fresh selling bias on the Greenback and the modest decline in US Treasury yields appear to support the humble advance in the precious metal.

Week ahead: Rate hike bets face a crucial data week

Despite the solid drop from the mid-September high, oil prices remained in the driver’s seat for another week, setting the tone in financial markets. Six months have passed since the late-February start of the US-Iran conflict, and there is still no breakthrough in the stalled talks, despite pressure from regional leaders and the rest of the world.

CFTC Report: Defensive currency positioning takes hold

The week in one sentence: Sterling and Euro shorts deepened in the week to September 22, while Yen longs were cut sharply. Oil positioning improved despite a steep price decline, and Gold exposure remained crowded. The main signal was a more defensive currency positioning backdrop.

Fed vs BoJ: Both hiked. The market only believes one of them – and the chart shows which

The Fed and the BoJ have just done something remarkably similar. Both central banks raised interest rates by 25 bps last week, both are confronting inflation risks, and both signal that future decisions will depend on incoming economic data.