AUD/USD wobbles around mid-0.7700s ahead of RBA minutes

• AUD/USD fades recovery moves from 0.7704 but hangs in balance to the week-start.
• Biden repeats vaccine optimism even as EU turns down AstraZeneca, rumors spread over plans for US tax hikes.
• Data from Australia, China and the US came in positive but couldn’t boost sentiment ahead of Fed, RBA’s Lowe spoke same.
• Minutes of latest RBA, Aussie House Price Index can offer immediate direction, risk catalysts will be the key.

AUD/USD takes rounds to 0.7755-50 during the initial Asian session on Tuesday after a dull start to the week portrayed the previous day. In doing so, the risk barometer paints cautious market sentiment ahead of this week’s key central bank meetings in the US and the UK. Also important will be how the US administration moves forward after the $1.9 trillion stimulus became a law as well as how Asia welcomes the American diplomats from the Biden administration.

RBA minutes can entertain but Fed is the key…

Although the Reserve Bank of Australia (RBA) Governor Philip Lowe rejected reflation fears while repeating the old speech on Monday, AUD/USD traders will be interested in observing how the rest of the RBA board feels about the same. However, a major attention will be given to Wednesday’s FOMC for which the Australia and New Zealand Banking Group (ANZ) said, “The focus is very much on how FOMC members will respond to recently approved and enacted fiscal stimulus, the successful vaccine rollout, and what degree of drift might emerge in the dot plot interest rate forecasts.”

Ahead of the RBA minutes, Westpac said, “The Minutes of the RBA’s March Board Meeting will provide further color around the latest monetary policy decision.”

Other than the pre-event caution, the coronavirus (COVID-19) vaccine updates and geopolitical risks also play their roles to determine near-term AUD/USD moves. Although US President Joe Biden promised 100 million vaccine jabs to reach his promise of immunizing all the American adults before May, European nations’ ban on using AstraZeneca vaccine over blood clotting challenges the sentiment. Also on the negative side was the US Secretary of State Antony Blinken’s Asia visit.

Alternatively, chatters over tax hike in the US and room for trade waivers joins positive dialogue between America and its Asia-Pacific friends during the latest virtual summit. Furthermore, upbeat prints of US ISM Manufacturing PMI and China’s Industrial Production also favor the bulls.

Against this backdrop, Wall Street benchmarks managed to end Monday on a positive note while the US 10-year Treasury yield dropped 2.8 basis points (bps) to 1.60% by the press time.

Looking forward, RBA minutes and Australia’s House Price Index for the fourth quarter (Q4), expected 2.0% QoQ versus 0.8% prior, will direct immediate AUD/USD moves but challenges to market sentiment will be important to watch.

Technical analysis

Monday’s Doji candlestick favors AUD/USD buyers to eye the 0.7800 threshold, while also looking at January tops near 0.7820 afterward. Alternatively, a 50-day SMA level of 0.7740 offers immediate support.