AUD/USD eases below 0.6950 amid PBOC inaction, RBA’s Lowe, Fed's Powell in focus

AUD/USD pares intraday gains after PBOC left monetary policy unchanged.
Downbeat Iron ore prices, Aussie housing market fears join hopes of higher Fed rates, recession chatters to favor bears.
Covid optimism in Beijing/Shanghai, hopes of US-China trade rebound challenge downside.
Juneteenth holiday to restrict market moves, comments from RBA’s Lowe, Fed Chair Powell’s testimony will be the key catalysts.

Anil Panchal FXStreet

AUD/USD takes offers near 0.6930 while consolidating the daily gains during early Monday. In doing so, the Aussie pair takes clues from China amid fears of global recession and the higher Fed rates.

That said, the People's Bank of China (PBOC) kept its key monetary policy rates, namely the 5-year and 1-year Loan Prime Rate (LPRs) unchanged at 4.45% and 3.70% respectively during Monday's announcement. The Chinese central bank’s inaction contrasts with the Western policymakers hawkish bias but fail to put a bid under the AUD/USD prices.

Also on the positive side is a piece of news from Reuters saying, “President Joe Biden's administration is reviewing the removal of some tariffs on China,” as well as upbeat covid news from Beijing and Shanghai to favor the market’s cautious optimism.

However, nearly 10% drops in iron ore prices, Australia’s key export joins the hawkish Fed concerns, not to forget fears of economic slowdown, to weigh on the AUD/USD prices.

The Washington Post (WaPo) raised fears of a tough new economic climate due to the US Federal Reserve (Fed) rate hike of the 75 basis points (bps). The news mentioned that the Fed’s rate hike launched a high-stakes test of the economy's ability to shed its dependence on limitless credit and tolerate higher borrowing costs for consumers, businesses and the government.

Also supporting the fears of recession, as well as hawkish Fed bets, were the key US central bank policymakers namely Minneapolis Fed President Neel Kashkari who backed another 75 bps rate hike in July. Furthermore, Treasury Secretary Janet Yellen also mentioned her expectations of a slowdown in the economy but ruled out recession concerns.

Amid these plays, the US stock futures print mild losses while the US Treasury yields remain unchanged at 3.23% amid Juneteenth holiday in the US.

Moving on, the Reserve Bank of Australia (RBA) Monetary Policy Meeting Minutes and a speech from RBA Governor Philip Lowe, up for publishing on Tuesday, will be important for the AUD/USD traders. However, major attention will be given to Fed Chairman Jerome Powell’s Testimony for fresh impulse as the Fed Boss is likely to be questioned on inflation woes to justify the recent rate hike.

Technical analysis

The AUD/USD pair’s failure to cross the 100-HMA and a downward sloping trend line resistance from Thursday, around 0.6960, triggered the latest pullback targeting the previous resistance line from early June, close to 0.6875 by the press time.

Additional important levels

Overview
Today last price	0.6935
Today Daily Change	0.0015
Today Daily Change %	0.22%
Today daily open	0.692

Trends
Daily SMA20	0.7107
Daily SMA50	0.7139
Daily SMA100	0.7221
Daily SMA200	0.7242

Levels
Previous Daily High	0.7054
Previous Daily Low	0.6896
Previous Weekly High	0.707
Previous Weekly Low	0.685
Previous Monthly High	0.7267
Previous Monthly Low	0.6828
Daily Fibonacci 38.2%	0.6957
Daily Fibonacci 61.8%	0.6994
Daily Pivot Point S1	0.6859
Daily Pivot Point S2	0.6799
Daily Pivot Point S3	0.6702
Daily Pivot Point R1	0.7017
Daily Pivot Point R2	0.7114
Daily Pivot Point R3	0.7174

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 remains confined in a range above 0.7100

AUD/USD extends its consolidative price move above 0.7100 through the Asian session on Tuesday, shrugging off hawkish comments from RBA Assistant Governor Sarah Hunter as traders keenly await the crucial Trump-Xi summit later this week. Meanwhile, escalating tensions in the Middle East and the Fed's hawkish outlook remain supportive of the bullish US Dollar undertone, capping spot prices.

USD/JPY bulls seem cautious below 157.50 as JPY intervention risks loom

USD/JPY consolidates below mid-157.00s during the Asian session on Tuesday as intervention fears help limit losses for the Japanese Yen. However, the BoJ's dovish rate hike to a 31-year high keeps JPY bulls on the back foot. At the same time, the US Dollar retains its bullish undertone amid the Fed's hawkish outlook and escalating Middle East tensions, acting as a tailwind for the pair.

Gold benefits from falling US bond yields; remains below $4,400 amid bullish USD

Gold regains positive traction during the Asian session on Tuesday, though it lacks bullish conviction and remains below $4,400. Falling oil prices ease inflation fears, dragging US bond yields lower and supporting the non-yielding yellow metal. Meanwhile, the Fed's hawkish stance, along with escalating Middle East tensions, keeps the US Dollar near its highest level since late July and acts as a headwind for the bullion.

Ethereum rallies above $2,700 as investors shrug off bearish sentiment

Ethereum (ETH) climbed above $2,700 on Monday after investors defended the realized price level despite negative sentiment over the Clarity Act's failure and the Federal Reserve rate hike. After the Clarity Act failed to advance in the Senate, ETH dipped below $2,400 last week. But right below that price is the top altcoin's realized price, or average on-chain cost basis, at $2,310.

The week ahead: Fuel prices in focus as we lead up to key eco releases

Financial markets are in a strange position as we move to the final weeks of Q3, uncertainty and volatility continue to grip markets, but the oil price is falling; and European and US stocks are poised to open higher later on Monday. Market stresses are concentrated in sovereign bonds, and European and US yields had another scare late on Friday, and moved higher.

BoJ Recap: Not as hawkish as expected

The Bank of Japan (BoJ) raised its short-term interest-rate target to 1.25% from 1.00% in a 7-2 vote, marking another step in the normalisation of monetary policy and widely matching what everyone has been expecting for weeks.