AUD/USD remains confined in a narrow trading band, around mid-0.7700s
- AUD/USD witnessed a subdued/range-bound price action through the Asian session on Tuesday.
- A cautious mood around the equity markets capped the upside for the perceived riskier aussie.
- The RBA meeting minutes did little to influence or provide any meaningful impetus to the pair.
The AUD/USD pair lacked any firm intraday direction and remained confined in a 15 pips narrow trading band, around mid-0.7700s through the Asian session.
The pair failed to capitalize on the previous day's goodish rebound from the vicinity of the 0.7700 mark and witnessed a subdued price action through the early part of the trading on Tuesday. The suspension of the Oxford/AstraZeneca coronavirus vaccine in several European nations – amid concerns about possible serious side effects – kept a lid on the recent optimism. This, in turn, was seen as a key factor that held bulls from placing any bets around the perceived riskier aussie.
The Australian dollar had a rather muted reaction to the release of RBA monetary policy meeting minutes, which suggested that there will be no rate increase unless inflation and employment targets are met. The central bank dismissed the idea that rising commodity prices might translate into sustained higher prices and reiterated to maintain stimulatory monetary conditions for as long as necessary. The RBA, however, ruled out the possibility of negative interest rates.
On the other hand, a modest pullback in the US Treasury bond yields capped any meaningful upside for the US dollar and extended some support to the AUD/USD pair. In fact, the yield on the benchmark 10-year US government bond retreated from the highest level in more than a year amid expectations that the Fed would take some action to curb the sharp rise in long-term borrowing cost. Hence, the key focus will remain on a two-day FOMC policy meeting, starting this Tuesday.
In the meantime, market participants will look forward to the release of the US monthly Retail Sales figures for some impetus. The data is due later during the early North American session, which, along with the US bond yields, will influence the USD price dynamics. Apart from this, the broader market risk sentiment might produce some short-term trading opportunities around the AUD/USD pair.
Technical levels to watch
Author
Haresh Menghani
FXStreet
Haresh Menghani is a detail-oriented professional with 10+ years of extensive experience in analysing the global financial markets.
