AUD/USD: Firmer sentiment, softer yields push Aussie bulls toward 0.6450, RBA’s Bullock eyed

AUD/USD edges higher past 0.6400 after a positive start of the week despite a quiet Monday. That said, the Aussie pair managed to cheer China-inspired optimism and a pullback in the US Treasury bond yields, as well as the upbeat Australia’s Retail Sales, the previous day. However, the cautious mood ahead of Reserve Bank of Australia (RBA) Deputy Governor Michele Bullock, to be the Governor in three weeks, prods the traders of the risk-barometer pair during early Tuesday in Asia.

China’s halving of the stamp duty on stock trading joined a Wall Street Journal (WSJ) piece suggesting Chinese Communist Party Chairman Xi Jinping’s indirect push for stimulus to favor market sentiment and the AUD/USD price.

Elsewhere, to the absence of any hawkish surprises from the Federal Reserve (Fed) and other central major bankers during last week’s Jackson Hole Symposium. It’s worth noting that Fed Chair Jerome Powell showed readiness for rate hikes while pushing back rate cut bias during his key Jackson Hole speech.

Talking about the data, Australia’s seasonally adjusted Retail Sales for July rose to 0.5% MoM versus 0.3% expected and -0.8% prior. On the other hand, the US Dallas Fed Manufacturing Business Index improved to -17.2 for August versus -21.6 expected and -20.0 prior.

While portraying the mood, Wall Street benchmarks closed in the green for the second consecutive day while the US 10-year Treasury bond yields dropped three basis points (bps) to 4.20% and the two-year counterpart declined half a percent to 5.5% at the latest.

Looking forward, a speech from the future RBA Governor Bullock will be crucial for the AUD/USD buyers as the Aussie central bank has paused the rate hikes in the last two consecutive meetings. Her will became more important as Australian Treasurer Jim Chalmers flagged expectations of witnessing substantially weaker Australian growth due to higher interest rates from the Reserve Bank of Australia (RBA) and China's slowdown.

Following that, the US Conference Board’s (CB) Consumer Confidence Index for August, expected at 116.2 versus prior 117.00, will entertain the AUD/USD traders. Above all, major attention will be given to the Fed’s preferred inflation gauge, namely the US Core Personal Consumption Expenditure (PCE) Price Index for July and Nonfarm Payrolls (NFP) for August.

Technical Analysis

Bullish MACD signals and nearly oversold RSI tease the AUD/USD bulls within a 13-day-old triangle formation, currently between 0.6450 and 0.6385. However, a downward-sloping resistance line from the mid-July, near 0.6510, acts as an extra hurdle for the buyers.