AUD/USD eyes to reclaim 0.6800 despite mixed Aussie PMIs, focus on RBA’s Lowe and yields

AUD/USD extends late Tuesday’s rebound from the 200-DMA while refreshing intraday high near 0.6770 amid Wednesday’s mid-Asian session.

In doing so, the Aussie pair consolidates the Reserve Bank of Australia (RBA) induced losses ahead of RBA Governor Philip Lowe’s speech. It’s worth noting, however, that the mixed Aussie PMIs for March seem to fail in stopping the quote’s latest recovery moves.

That said, Australia’s AiG Construction PMI for January dropped to -5.8 from -5.0 but the Manufacturing counterpart for the said month improved to 5.6 from -6.4 in previous readings. Further, S&P Global Services PMI for March rose to 50.7 from 48.2 while the S&P Global Composite PMI also improved to 48.5 versus 48.1 prior readings.

While tracing the Aussie pair’s latest run-up, the previous day’s RBA Rate Statement gains major attention as it said, “Board expects that some further tightening of monetary policy may well be needed.”

Additionally favoring AUD/USD bulls is the broad US Dollar weakness amid cautious optimism in the market and the latest challenges to the greenback’s reserve currency status, mainly emanating from Russia, China and Brazil.

Furthermore, the recent declines in the hawkish Fed bets, despite the upbeat comments from Federal Reserve (Fed) officials, also allow the quote to remain firmer. Federal Reserve Bank of Cleveland leader Loretta Mester recently cited the need to hike rates above 5% and hold them there for a while.

While portraying the mood, Wall Street closed with minor losses but the US Treasury bond yields remain depressed with the benchmark 10-year coupons holding lower grounds near 3.34% after falling in the last five consecutive days. It should be observed that the CME’s FedWatch Tool suggests almost even chances of the US central bank’s 0.25% rate hike in May.

Moving on, RBA’s Lowe needs to strike a strong hawkish message to defend the latest gains. Following that, US ISM Services PMI and ADP Employment Change for March will be in focus. It’s worth mentioning that the yields are crucial to watch as their fall has recently weighed on the greenback and allowed the AUD/USD price to remain firmer.

Technical analysis

Successful trading beyond the 200-DMA, around 0.6750 by the press time, directs AUD/USD bulls toward a confluence of the 50-DMA and 100-DMA, close to 0.6805 at the latest.