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AUD/USD retreats towards 0.7250 on cautiously optimistic RBA, US PMI eyed

  • AUD/USD fades bounce off intraday low as RBA sounds cautiously optimistic.
  • RBA matches wide market expectations of keeping the benchmark rate, bond purchases intact.
  • Market sentiment dwindles amid China woes, anxiety over US stimulus, debt ceiling extension.
  • US ISM Services PMI, final reading of Markit activity numbers for August eyed for fresh impulse.

AUD/USD   takes offers towards the intraday low of 0.7261, down 0.23% on a day, after an initial inaction to the Reserve Bank of Australia (RBA) monetary policy announcement on early Tuesday.

Although the RBA kept the benchmark interest rate unchanged at 0.10%, also keeping the weekly bond purchase at $4.00 billion, the rate statement raised doubts over the Aussie economic expansion due to the pandemic-led local lockdowns.

Read: RBA: Setback to the economic expansion in Australia is expected to be only temporary

Earlier in the day, Australia Trade Balance improved for August but the Imports and Exports dropped for the stated month. Also on the negative side was the ANZ Job Advertisement for September that dropped below prior and market forecast to -2.7%.

Other than the RBA’s cautious optimism and mixed data, published earlier in Asia, AUD/USD tracks sluggish mood in the market to remain depressed due to its risk barometer status.

Although the global markets are yet to overcome the fears of Evergrande default, the line of Chinese real estate firms that may roil the financials seems to be longer. Earlier in the day, Bloomberg conveyed the news of Fantasia Holdings Group’s missed debt payment. Following that, global rating giant Fitch downgraded a Beijing-based property developer Sinic.

Furthermore, US President Joe Biden’s readiness to trim the Democratic demand on infrastructure spending initially favored market sentiment in Asia. However, concerns that the Republicans will reject the move weighed on the risk appetite of late. It should be noted that Biden previously cited fears of crossing the October 18 deadline without any deals while blaming the Republicans.

Additionally, a jump in Australia’s total covid infections to the highest since September 30, 2,406 at the latest, also weighs on the AUD/USD prices.

It’s worth noting that Japan’s fresh PM Fumio Kishida hints at joining the US in taming China’s rush for power in Taiwan, which in turn drown the risk appetite and challenges the AUD/USD prices.

Also portraying the market’s indecision is the lackluster moves of the US stock futures and the Treasury yields. However, the US Dollar Index (DXY) rebounds towards 94.00 and weighs on the commodities, as well as Antipodeans.

Having witnessed an initial reaction to the RBA decision, actually inaction, the AUD/USD traders will follow back to the risk catalysts for short-term direction. Among them, China and US politics should be in the spotlight. Additionally, the US ISM Manufacturing PMI and final reading of Markit PMI for September will also be important to watch for further clarity.

Read: US September ISM Services PMI Preview: Eyes on inflation and employment details

Technical analysis

AUD/USD struggles between the previous resistance line from early September and a two-week-old horizontal hurdle, respectively around 0.7260 and 0.7330. Given the quote’s repeated failures to cross the 200-SMA surrounding the 0.7300 threshold, odds of breaking the resistance-turned-support of 0.7260, followed by a south-run targeting September’s low near 0.7170, can’t be ruled out.

Additional impotant levels

Overview
Today last price0.7274
Today Daily Change-0.0007
Today Daily Change %-0.10%
Today daily open0.7281
 
Trends
Daily SMA200.7291
Daily SMA500.7313
Daily SMA1000.7449
Daily SMA2000.7587
 
Levels
Previous Daily High0.7319
Previous Daily Low0.725
Previous Weekly High0.7312
Previous Weekly Low0.717
Previous Monthly High0.7478
Previous Monthly Low0.717
Daily Fibonacci 38.2%0.7293
Daily Fibonacci 61.8%0.7276
Daily Pivot Point S10.7248
Daily Pivot Point S20.7214
Daily Pivot Point S30.7179
Daily Pivot Point R10.7317
Daily Pivot Point R20.7352
Daily Pivot Point R30.7386

Author

Anil Panchal

Anil Panchal

FXStreet

Anil Panchal has nearly 15 years of experience in tracking financial markets. With a keen interest in macroeconomics, Anil aptly tracks global news/updates and stays well-informed about the global financial moves and their implications.

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