AUD/USD slips below 0.6700 amid hawkish Fed stance despite RBA’s minutes

The Australian Dollar registered losses of 0.03% against the US Dollar as Federal Reserve officials hitting the wires were reluctant to hint at when rate cuts begin. Consequently, US Treasury bond yields fell, while the Greenback stood tall, flat at around 104.62. The AUD/USD trades at 0.6668, virtually unchanged as Wednesday’s Asian session begins.

AUD/USD falls despite hawkish RBA’s minutes, offset by Fed officials' focus on inflation

Wall Street finished the session with gains ahead of the release of NVIDIA’s earnings. Fed officials led by Atlanta’s Fed President Bostic and Governors Waller and Barr crossed the newswires.

Bostic stated he isn’t in a hurry to lower rates and emphasized the Fed’s job to achieve the 2% goal, saying that it’s the bank’s priority. Lately, Fed Governor Waller stated that despite seeing progress on inflation after April’s inflation data, he needs to see subsequent months of inflation trending lower. Lastly, Vice-Chair Barr remarked, "We still need to finish the job on inflation."

Even though Fed commentary was slightly “hawkish,” US Treasury yields dropped, but the US Dollar remained steady. That said, North American traders brace for the release of the Federal Open Market Committee (FOMC) minutes on Wednesday.

On the Australian side, the minutes of the Reserve Bank of Australia’s (RBA) last meeting were tilted hawkish as RBA board members considered a rate hike during their discussions. ANZ economists , in a note, wrote,“We continue to think that the economy is softening enough to deliver in target inflation and hence retain our view that the next move in the cash rate is down.” They estimate a modest easing cycle with just three rate cuts.

The US economic docket for the week before the latest Fed meeting minutes was released on Wednesday. On Thursday, US Initial Jobless Claims and the Chicago Fed National Activity Index are expected to show the labor market is cooling.

AUD/USD Price Analysis: Technical outlook

The AUD/USD is consolidating around the 0.6600-0.6714 area, with momentum favoring a continuation of the uptrend. The Relative Strength Index (RSI) hints buyers are in charge, though they are taking a breather as the RSI remains flat.

With that said, if buyers reclaim 0.6714, the next resistance level would be January 12 high at 0.6728. Once surpassed, the next stop would be the 0.6800 psychological level, followed by the December 28 high at 0.6871.

Conversely, if sellers drag the AUD/USD exchange rate below 0.6650, look for a retest of 0.6600. Further losses lie at the 100-day moving average (DMA) at 0.6563.