- AUD/USD breaks the choppy range between 0.6900 and 0.6925.
- The pair earlier benefited from the Fed’s effort to restore investors’ confidence via corporate bond buying.
- Comments from the White House Adviser Larry Kudlow, expectations of the US-China talks could extend the latest risk-on sentiment.
- RBA minutes, Aussie House Price Index and qualitative catalysts to direct the pair’s immediate moves.
AUD/USD takes the bids around 0.6940 amid the early Asian morning on Tuesday. In doing so, the pair breaks the recent range between 0.6905 and 0.6925 while also keeping the late-US session recovery moves from 0.6840.
Although the weekend updates concerning the coronavirus (COVID-19) renews fears of outbreak 2.0 and weighed on the Aussie pair during the early Monday, the Fed’s action recalled the buyers. Even so, the RBA minutes and the second-tier Aussie data, coupled with the latest news from the US, becomes the key to forecast near-term pair moves.
Fed-led optimism supersedes over the virus fears….
With the US Federal Reserve (Fed) stepping in to increase the corporate bond-buying, the markets’ previous fears backed by weekend updates signaling resurgence in the US, Tokyo and Beijing seem to have faded off-late. Recently, the Fed added to its plethora of tools to liquidity infusion while extending favor for the non-profit organizations.
Other than the Fed, Reuters news suggesting the meeting between the US Secretary of State Mike Pompeo and Chinese delegates in Hawaii, sometime during this week, also favors the risk-on sentiment. Further, the White House Economic Adviser Larry Kudlow also tried his part to reignite the hopes of the V-shaped recovery in 2021.
On the contrary, the US Food and Drug Administration (FDA) warned over the use of the much-championed drug Remdesivir, which in turn might keep the optimism chained.
Amid all these catalysts, Wall Street managed to post mild gains whereas the US 10-year Treasury yields closed Monday above 0.70%, up over two basis points (bps) on a day.
Traders are likely to wait for more risk catalysts to aptly predict immediate Aussie moves while also keeping eyes on the RBA minutes and Australia’s first quarter (Q1) House Price Index for further clarifications. While the RBA minutes are less likely to be a major event, the House Price Index is expected to soften to 2.7% from 3.9% prior.
Technical analysis
A sustained move above 0.6940 will enable the Aussie bulls to challenge 0.7000 round-figure. However, the pair’s further upside might find it difficult to cross the recent high surrounding 0.7065 as well as July 2019 tops near 0.7085.
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