AUD/USD: Bearish pounce ahead of RBA Minutes, US PMIs around 0.6700
- AUD/USD treads water after snapping three-day winning streak.
- Market sentiment remains indecisive as recent data, Fed talks push back Fed rate cut concerns.
- Dovish RBA move, US Dollar rebound challenge Aussie pair buyers.
- RBA Minutes, China GDP and US PMIs will be in focus amid a likely sluggish week.
AUD/USD holds lower grounds near 0.6700 as it begins the key week on a sluggish note after positing the first daily loss in four the previous day. The Aussie pair marked the biggest daily loss in six weeks the previous day as the US Dollar cheered mostly upbeat US data and the Fed policymakers’ hesitance in welcoming doves. However, traders remain cautious ahead of this week’s Reserve Bank of Australia (RBA) Monetary Policy Meeting Minutes, Gross Domestic Product (GDP) for China and the US PMIs for April.
A wider-than-expected fall in US Retail Sales failed to supersede upbeat figures from the US Industrial Production and University of Michigan’s (UoM) Consumer Confidence Index on the previous day and allowed the US Dollar to rebound. That said, US Retail Sales dropped by 1.0% for March versus -0.4% expected and -0.2% prior. On the contrary, Industrial Production grew by 0.4% during the stated month compared to 0.2% market forecasts and prior reading. Additionally positive was the preliminary reading of the University of Michigan’s (UoM) Consumer Confidence Index for April which improved to 63.5 versus 62.0 analysts’ expectations and previous readings. Furthermore, Year-ahead inflation expectations rose from 3.6% in March to 4.6% in April while its Five-year counterpart reprinted 2.9% for the said month.
Not only the data but hawkish comments from the Fed policymakers also enabled the greenback to pare the previous losses. “The recent developments are consistent with one more rate hike,” said Atlanta Federal Reserve (Fed) President, Raphael Bostic in an interview with Reuters this Friday. On the same, Fed Governor Christopher Waller mentioned that the recent data show that the Fed hasn’t made much progress on its inflation goal and added that rates need to rise further, per Reuters. However, Federal Reserve Bank of Chicago President Austan Goolsbee said in an interview with CNBC on Friday that he still wants to see the data. The policymaker also added, “But let’s be mindful we’ve raised a lot; some of the lag is coming through possibly in today’s retail sales number.”
Amid these plays, US Dollar Index (DXY) snapped a three-day south run and bounced off the lowest level in a year while Wall Street closed with minor losses and the bond yields managed to recover.
It’s worth noting that the weekend news suggesting a jump in China’s housing market index seemed to have prodded the AUD/USD bears of late. That said, China’s New Home Prices for March jumped at their fastest pace in 21 months while marking a three-month uptrend.
Looking ahead, a light calendar on Monday may allow the AUD/USD pair to extend the previous losses amid cautious markets. However, this week’s RBA Minutes and US PMIs, as well as China’s Q1 GDP, will be important to watch amid high hopes of economic recovery in the US and China, as well as expectations of RBA’s dovish run from now.
Technical analysis
AUD/USD pair’s U-turn from a convergence of the 100-DMA and six-week-old ascending resistance line, close to 0.6800, joins recently downbeat oscillators to direct sellers toward an ascending support line from March 10, around 0.6630 by the press time.