AUD/USD ignores RBA mintues, grinds higher around 0.7250 on cautious optimism

• AUD/USD keeps recovery moves from monthly low, seesaws around intraday high of late.
• RBA Minutes reiterate virus-led challenges to the economy and rejects rate hike before 2024.
• Market sentiment improves despite fresh virus-led local lockdowns in Australia, ongoing Evergrande saga and Fed tapering woes.
• Cautious optimism concerning UN battles mixed comments from Aussie PM, second-tier US data risk catalysts eyed ahead of key Wednesday.

AUD/USD pays a little heed to the Reserve Bank of Australia (RBA) monetary policy meeting minutes while taking rounds to 0.7255-60 during early Tuesday, up 0.08% intraday. In doing so, the risk barometer tracks mildly bid S&P 500 Futures to consolidate recent losses around monthly low.

As per the latest RBA Minutes, “Members recognized that the outbreak of the delta variant was delaying the recovery and had added to the uncertainty about the future.” Even so, the statement adds that the economy was expected to bounce back as vaccination rates increase and restrictions are eased. Hence, mixed comments confuse AUD/USD traders amid sluggish markets and off in China.

Read: RBA Minutes: Central scenario is conditions for rate rise will not be met until 2024

Other than the cautious optimism conveyed by the RBA, the market’s consolidation of the latest losses also allows the AUD/USD pair to keep the rebound from the monthly low.

Behind the corrective pullback in market sentiment seems another day of Chinese traders’ absence, as well as a lack of fresh fears. Also on the positive side could be the recently upbeat ANZ Roy Morgan Consumer Sentiment survey that finds the Aussie inflation expectations rose 0.1 percentage points to 4.6% during the four-week average. Furthermore, comments over the United Nations meeting this week hints at the global leaders’ ability to agree on the climate change accord despite turning down the direct talks with Iran. It should be noted that the Aussie Prime Minister Scott Morrison’s comments dimming the hope of the deal with the European Union (EU) join US President Joe Biden’s push for partnership with the United Nations (UN) to solve the key problems weigh on the market sentiment.

Even so, 7-day snap lockdowns for Byron and Tweed Shires of Australia challenge the recovery moves. Additionally, comments from the global rating agency S&P, signaling that China’s Evergrande will default join the Fed tapering woes to keep the optimists in check.

Amid these plays, S&P 500 Futures print 0.30% intraday loss, bouncing off a two-month low whereas the US 10-year Treasury yields consolidate the latest losses around 1.31% by the press time.

As traders lick their wounds, US second-tier data, mainly relating to housing, may entertain AUD/USD traders ahead of the key Fed meeting and China’s return on Wednesday. Also important are the headlines over Evergrande.

Technical analysis

Unless crossing a convergence of 20-DMA and 50-DMA, around 0.7335-40, AUD/USD remains vulnerable to retest the yearly low near 0.7100. However, one-month-old horizontal support, close to 0.7220, may offer immediate support.