AUD/USD buyers flirt with 0.6900 amid sluggish markets, RBA’s Lowe eyed

• AUD/USD consolidates weekly losses amid quiet session, light calendar.
• Treasury yields rebound, USD retreats even as recession fears probe optimists.
• Aussie yields brace for the biggest fall in a decade as hawkish RBA lures bond buyers.
• RBA’s Lowe should repeat readiness for higher rates to defend Aussie bulls.

AUD/USD dribbles around 0.6900, marking the first daily gains in three, as risk-aversion ebbs during early Friday morning in Europe. A light calendar and a lack of major negatives from macro seem to have underpinned the Aussie pair’s latest corrective pullback ahead of the scheduled speech from Reserve Bank of Australia (RBA) Governor Philip Lowe.

US 10-year Treasury yields rebound from a two-week low, flashed the previous day, as traders await more clues to confirm the economic slowdown. Even so, the bond coupons brace for the first weekly loss in four while reversing from the highest levels since 2011, at 3.09% by the press time.

At home, Australia’s 10-year Treasury bond yields extend pullback from the highest levels since 2014 despite the 1.0% daily gains around 3.71%. More importantly, the 3-year counterpart eyes the biggest weekly loss since 2011 with over 11% fall to 3.31% by the press time.

It’s worth noting that 0.50% intraday gains of the S&P 500 Futures also portray the market’s cautious optimism, or at least consolidation of the latest pessimism, during early Friday.

Amid these plays, the US Dollar Index (DXY) drops 0.15% intraday to 104.25 at the latest, which in turn allows commodities and Antipodeans to lick their wounds.

While a pause in the risk-off mood and softer USD triggered the Aussie pair’s rebound, headlines suggesting improved traffic in China add strength to the recovery moves. Even so, a cautious mood ahead of a speech from RBA’s Lowe tests the bulls.

That said, softer US PMIs and Fed Chair Jerome Powell’s readiness for more rate hikes, as well as fears over economic growth, seemed to have weighed on the AUD/USD prices the previous day. In doing so, the Aussie bears ignored upbeat S&P Global PMIs for Australia.

Moving on, AUD/USD prices are likely to remain firmer as RBA’s Lowe might not want to spoil his reputation by stepping back from the latest comments suggesting further rate hikes. Also important for the pair traders to watch is the US New Home Sales for May. Above all, updates concerning central bank moves and recession will be important to watch for clear directions.

Technical analysis

AUD/USD recovery needs validation from a downward sloping resistance line from June 07, at 0.6930 by the press time. However, sellers are likely to remain away until witnessing a downside break of the six-week-old support line, around 0.6855-60 at the latest.