AUD/USD grinds higher past 0.6700 as RBA Minutes, China/US data inspired run-up fades

AUD/USD struggles to cheer the first daily gain in three as the quote dribbles around 0.6725-20 amid early Wednesday morning in Asia. In doing so, the Aussie pair seeks fresh clues to defend the previous day’s upbeat performance, mainly led by the Reserve Bank of Australia (RBA) Monetary Policy Meeting Minutes, China data dump and downbeat US housing market statistics.

That said, RBA Minutes appear slightly hawkish as it said that the board considered a rate hike at the April meeting, before deciding to pause.

On the other hand, China’s Q1 GDP grows 2.2% QoQ versus 2.2% expected and 0.0% prior. Further, Retail Sales growth jumps 10.9% YoY in March versus 7.4% expected and 3.5% prior whereas Industrial Production eased below 4.0% expected growth figures to 3.9%, versus 2.4% previous readings. Further, the International Monetary Fund (IMF) said in its latest report on Tuesday, China will be the top contributor to global growth over the next five years, with its share set to be doubled that of the US, per Bloomberg.

Elsewhere, after witnessing upbeat prints of the NY Empire State Manufacturing Index and the US National Association of Home Builders (NAHB) housing market index on Monday, the US Housing Starts and Building Permits roiled the mood with downbeat prints for March on Tuesday. That said, the Housing Starts eased to 1.42M versus 1.432M prior and 1.40M market forecasts whereas the Building Permits dropped to 1.413M from 1.55M previous readings and analysts’ estimations of 2.2M.

It should be noted that the hawkish Fed talks couldn’t save the US Dollar of late as St. Louis Federal Reserve President James Bullard said, in an interview with Reuters, “Interest rates will need to continue to rise in the absence of clear progress on inflation.” On Monday, Richmond Fed President Thomas Barkin said that he wants to see more evidence of inflation settling back to target.

Amid these plays, US Treasury bond yields retreat while Wall Street closed mixed.

Moving on, a light calendar in the Asia-Pacific region could restrict immediate moves, which in turn highlights risk catalysts as the key factors to watch for clear directions.

Technical analysis

AUD/USD rebounds from a 21-DMA inside a six-week-old rising trend channel, suggesting a gradual recovery in Aussie prices.