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AUD/USD dribbles around 0.7200 as traders brace for RBA, US inflation

  • AUD/USD holds lower ground within a choppy range after reversing from six-week high.
  • Markets remain indecisive as US data, Fedspeak favor bears but China-linked news suggests improvement in sentiment.
  • RBA is up for the second rate hike of 2022 to tame inflation.
  • NFP’s surprise highlight this week’s US CPI for the pair bears.

AUD/USD struggles to overcome Friday’s losses, despite risk-positive news from China, as traders seem cautious ahead of this week’s monetary policy meeting by the Reserve Bank of Australia (RBA), as well as the US Consumer Price Index (CPI) for May. That said, the quote seesaws around 0.7210, staying inside an immediate 15-pip trading range near 0.7200 during the initial Asian session on Monday.

Beijing’s readiness to ease the virus-led activity controls joins the US preparations for announcing tariff relief for China to underpin the latest improvement in the market sentiment. While the same should have ideally favored the AUD/USD buyers, Friday’s upbeat US jobs report and hawkish Fedspeak challenge the pair’s upside momentum ahead of the key RBA and the US inflation data.

“Dine-in service in Beijing will resume on Monday, except for the Fengtai district and some parts of the Changping district, the Beijing Daily said. Restaurants and bars have been restricted to takeaway since early May,” reports Reuters.

Additionally, US Commerce Secretary Gina Raimondo said, per Reuters, “President Joe Biden has asked his team to look at the option of lifting some tariffs on China that were put into place by former President Donald Trump, to combat the current high inflation.”

On Friday, US Nonfarm Payrolls (NFP) came in 390K for May, more than 325K expected but lesser than the upwardly revised 428K previous readouts. Further, the Unemployment Rate remained unchanged at 3.6% versus expectations of a slight decline to 3.5%. Additionally, the US ISM Services PMI fell to 55.9 in May, versus 56.4 market consensus and 57.1 flashed in April.

Following the data, Cleveland Fed President Loretta Mester crossed wires while saying that the one problem that the Fed has is inflation. The policymakers also added that the risks of a recession have gone up.

While weighing these catalysts market sentiment remains sluggish and restricts AUD/USD moves, due to the pair’s risk-barometer status. That said, Wall Street benchmarks closed in the red and the US 10-year Treasury yields posted the first weekly gain in three at the latest whereas the S&P 500 Futures remain indecisive at around 4,100 by the press time.

Moving on, risk catalysts may entertain AUD/USD traders with the TD Securities Inflation for May acting as an immediate catalyst to watch. However, major attention will be given to how the RBA manages to announce a 0.25% rate hike and hints at more. Also important will be May’s CPI from the US and China.

Technical analysis

In addition to a pullback from the 200-DMA surrounding 0.7260, a clear downside break of a three-week-old ascending support line, now resistance around 0.7240, also keeps AUD/USD bears hopeful to retest 20-DMA support surrounding 0.7080.

Additional important levels

Overview
Today last price0.7211
Today Daily Change0.0004
Today Daily Change %0.06%
Today daily open0.7207
 
Trends
Daily SMA200.7063
Daily SMA500.7229
Daily SMA1000.723
Daily SMA2000.7258
 
Levels
Previous Daily High0.7283
Previous Daily Low0.7202
Previous Weekly High0.7283
Previous Weekly Low0.714
Previous Monthly High0.7267
Previous Monthly Low0.6828
Daily Fibonacci 38.2%0.7233
Daily Fibonacci 61.8%0.7252
Daily Pivot Point S10.7178
Daily Pivot Point S20.7149
Daily Pivot Point S30.7097
Daily Pivot Point R10.726
Daily Pivot Point R20.7312
Daily Pivot Point R30.7341

Author

Anil Panchal

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.

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