- AUD/USD pauses three-day uptrend but lacks momentum ahead of RBA.
- Australia’s Q1 Current Account Balance came in better-than-forecast but fails to defend the Aussie bulls amid sluggish markets.
- Market sentiment dwindles amid light calendar, mixed feelings about Fed and RBA.
- RBA is likely to stand pat, positive surprise can’t be ruled out amid recently firmer Aussie data.
AUD/USD remains sidelined above 0.6600 as it depicts the trader’s indecision ahead of the key Reserve Bank of Australia (RBA) Interest Rate Decision on early Tuesday. In doing so, the Aussie pair also justifies the sluggish markets amid a light calendar and mixed concerns about the US Federal Reserve (Fed), especially after the recent downbeat US data. With this, the Aussie pair fails to react to the mid-tier data at home.
Australia’s first quarter (Q1) Current Account Balance came in 12.3 billion versus 5.175 billion expected and 14.1 billion prior. With this, the hawkish RBA bets gain momentum but fail to underpin the AUD/USD pair ahead of the central bank’s rate verdict.
On the other hand, the US ISM Services PMI declined to 50.3 for May versus 51.5 expected and 51.9 prior whereas growth of the Factory Orders also deteriorated during the stated month to 0.4% versus 0.5% market forecasts and 0.9% previous readings. It should be noted that the final readings of S&P Global Composite PMI and Services PMI also marked softer figures for May.
It’s worth noting that the market’s bets on the Fed’s June rate hike dropped from around 80% in the middle of the last week to nearly 25% after the downbeat US data. The same could have joined an absence of the Fed talks to weigh on the US Treasury bond yields and the US Dollar. However, hawkish comments from International Monetary Fund (IMF) Managing Director Kristalina Georgieva and concerns about the need for the US large banks to hold more capital to battle the landing crisis prod the AUD/USD buyers.
Amid these plays, Wall Street closed in the red whereas S&P500 Futures print mild losses by the press time. Furthermore, the US 10-year Treasury bond yields remain pressured around 3.68%, after reversing Friday's rebound the previous day, whereas the two-year bond coupons also defend the week-start bearish bias near 4.46% by the press time.
That said, the RBA is expected to keep the current monetary policy unchanged with a 3.85% benchmark rate. However, the recently positive Aussie data surrounding inflation and growth joins the Reserve Bank of New Zealand’s (RBNZ) hawkish move to allow some of the analysts to expect a 0.25% rate hike, which in turn can bolster the AUD/USD price in case of a positive surprise.
With this in mind, Analysts at the ANZ said, “Last week we revised up our terminal rate call in Australia 4.35%, as we no longer see 4.10% as sufficient to bring inflation back to the target quick enough. Nonetheless, we see it as a line ball call whether the RBA hikes at today’s meeting or waits until July, though favor a hike today at the margin.”
As AUD/USD’s rebound from the support line of a falling wedge established in late December 2022 crossed 61.8% Fibonacci retracement of October 2022 to February 2023, it is all set to confront a convergence of the 50% Fibonacci retracement level and the 50-DMA, around 0.6660.
Additional impotant levels
|Today last price||0.6613|
|Today Daily Change||-0.0004|
|Today Daily Change %||-0.06%|
|Today daily open||0.6617|
|Previous Daily High||0.6638|
|Previous Daily Low||0.6579|
|Previous Weekly High||0.6639|
|Previous Weekly Low||0.6458|
|Previous Monthly High||0.6818|
|Previous Monthly Low||0.6458|
|Daily Fibonacci 38.2%||0.6615|
|Daily Fibonacci 61.8%||0.6602|
|Daily Pivot Point S1||0.6585|
|Daily Pivot Point S2||0.6553|
|Daily Pivot Point S3||0.6527|
|Daily Pivot Point R1||0.6643|
|Daily Pivot Point R2||0.667|
|Daily Pivot Point R3||0.6702|
Information on these pages contains forward-looking statements that involve risks and uncertainties. Markets and instruments profiled on this page are for informational purposes only and should not in any way come across as a recommendation to buy or sell in these assets. You should do your own thorough research before making any investment decisions. FXStreet does not in any way guarantee that this information is free from mistakes, errors, or material misstatements. It also does not guarantee that this information is of a timely nature. Investing in Open Markets involves a great deal of risk, including the loss of all or a portion of your investment, as well as emotional distress. All risks, losses and costs associated with investing, including total loss of principal, are your responsibility. The views and opinions expressed in this article are those of the authors and do not necessarily reflect the official policy or position of FXStreet nor its advertisers. The author will not be held responsible for information that is found at the end of links posted on this page.
If not otherwise explicitly mentioned in the body of the article, at the time of writing, the author has no position in any stock mentioned in this article and no business relationship with any company mentioned. The author has not received compensation for writing this article, other than from FXStreet.
FXStreet and the author do not provide personalized recommendations. The author makes no representations as to the accuracy, completeness, or suitability of this information. FXStreet and the author will not be liable for any errors, omissions or any losses, injuries or damages arising from this information and its display or use. Errors and omissions excepted.
The author and FXStreet are not registered investment advisors and nothing in this article is intended to be investment advice.