AUD/USD stays pressured around 0.6700 on unimpressive RBA Minutes, focus on Aussie-China talks

AUD/USD pays little heed to the Reserve Bank of Australia's (RBA) latest Monetary Policy Meeting Minutes while holding lower grounds near 0.6700 during early Tuesday. In doing so, the Aussie pair portrays the market’s cautious mood ahead of the other key catalysts, namely a meeting between Australian and Chinese diplomats, as well as a monetary policy meeting of the People’s Bank of China (PBOC).

RBA Minutes suggested that Australia's central bank considered leaving interest rates unchanged at its December policy meeting, citing the lagged effects of the aggressive tightening delivered so far and the benefits of moving cautiously in an uncertain environment.

Also read: RBA minutes: Considered pausing hikes at Dec meeting, still sees more ahead

Apart from the RBA Minutes, mixed concerns in the market and a cautious mood ahead of the key diplomatic meeting between the Aussie and Chinese policymakers challenge the AUD/USD pair moves. Also likely to have probed the momentum traders could be the year-end holiday mood and a light calendar elsewhere, not to forget the looming interest rate decision from the PBOC.

Earlier in the day, Australian Foreign Minister Penny Wong said she would push for trade sanctions to be lifted in her meeting with Chinese counterpart Wang Yi as Canberra looks to repair strained diplomatic relations with Beijing, per Reuters. “Wong is expected to meet Wang Yi in Beijing on Wednesday, the first visit by an Australian minister since 2019 and the first formal talks in Beijing between the two nations' top diplomats since 2018,” added the news.

It should be noted that the recession woes underpin the US Treasury yield and challenge the riskier assets, like AUD/USD and equities of late.

Looking forward, the PBOC Interest Rate Decision will be important amid indecision surrounding the longer-term Loan Prime Rate (LPR). That said, the one-year LPR is likely to remain unchanged at 3.65% while some in the market do favor an increase in the five-year LPR, currently near 4.30%, which could favor AUD/USD bulls.

Technical analysis

Inverted hammer bullish candlestick on the daily chart of the AUD/USD pair suggests further upside momentum of the quote. Also challenging the sellers is the 100-DMA support near 0.6665.