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AUD/USD struggles around 0.6700 amid hawkish Fed comments, RBA Minutes eyed

  • AUD/USD retreats from intraday high, pares daily gains.
  • Federal Reserve speakers keep hawkish hopes on the table, highlight upcoming data.
  • RBA Minutes need to push back dovish comments from Governor Lowe to defend buyers.
  • Australia’s Mid-Year Economic and Fiscal Outlook could offer immediate directions.

AUD/USD retreats from intraday high as buyers struggle to keep the latest gains around 0.6700 amid hawkish comments from the Federal Reserve (Fed). Also challenging the Aussie pair buyers is the fresh Covid fears from China, as well as the cautious mood ahead of the key data/events.

Recently, Presidents of the Federal Reserve Bank of Cleveland and New York crossed wires and defended the previous week’s hawkish bias of the US central bank. That said, New York Fed President John Williams said that it was possible for the FOMC to hike more than the terminal rate projected in the dot plot. On the same line, Cleveland Fed President Loretta Mester said her estimate for interest rates is higher than that of her colleagues and the central bank needs sustained tight policy to defeat inflation.

It’s worth noting that Friday’s downbeat US Purchasing Managers’ Index (PMI) for December seemed to have offered a positive start of the week to the AUD/USD pair. On Friday, the US S&P Global Manufacturing PMI dropped to 46.2 from 47.7 in November, as well as the market expectation of 47.7. Further, S&P Global Services PMI declined to 44.4 in December's flash estimate from 46.2 in November and market expectation of 46.8.

Elsewhere, the softening of the activity data from China and doubts over the recently declining COVID-19 numbers also keep AUD/USD buyers on the edge. “China President Xi Jinping and his senior officials pledged to shore up China's battered economy next year as the deaths of two veteran state journalists highlighted the worsening spread of COVID-19 in the capital Beijing,” per Reuters. The news adds that the reports of the deaths came as China set out urgent plans on Friday to protect rural communities from the virus as millions of city-dwellers plan their Lunar holidays, starting on Jan. 22, for the first time in years.

Furthermore, a recently hawkish central bank plays exert additional downside pressure on the AUD/USD prices even if the year-end holiday mood is likely restricting the AUD/USD pair’s immediate moves.

At home, the Reserve Bank of Australia (RBA) isn’t too hawkish despite the latest rate lift and has previously teased the easing of the monetary policy. Hence, this week’s RBA Minutes will be closely observed to confirm the bearish bias, which in turn could weigh on the AUD/USD prices. Additionally important will be Friday’s United States (US) Durable Goods Orders for November, expected 0.0% versus an upwardly revised 1.1% prior, as well as the US Core Personal Consumption Expenditures (PCE) - Price Index for the said month, expected 4.6% YoY versus 5.0% prior.

For today, Australia’s Mid-Year Economic and Fiscal Outlook will be important as economic fears gain momentum, which if confirmed could weigh on the AUD/USD prices.

Technical analysis

Although the 100-DMA defends AUD/USD buyers around 0.6665, the recovery remains elusive as the Aussie pair keeps the previous week’s downside break of an ascending support line from November 21, now resistance around 0.6730.

Additional important levels

Overview
Today last price0.6699
Today Daily Change0.0012
Today Daily Change %0.18%
Today daily open0.6687
 
Trends
Daily SMA200.6739
Daily SMA500.6558
Daily SMA1000.667
Daily SMA2000.6896
 
Levels
Previous Daily High0.6736
Previous Daily Low0.6675
Previous Weekly High0.6893
Previous Weekly Low0.6675
Previous Monthly High0.6801
Previous Monthly Low0.6272
Daily Fibonacci 38.2%0.6698
Daily Fibonacci 61.8%0.6713
Daily Pivot Point S10.6663
Daily Pivot Point S20.6639
Daily Pivot Point S30.6603
Daily Pivot Point R10.6724
Daily Pivot Point R20.676
Daily Pivot Point R30.6784

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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