- AUD/USD probes the upper-end of 0.6968-88 trading range after six days of consecutive rise.
- Broad risk-on mood, upbeat second-tier Aussie data offered the pair a positive start to the week.
- RBA is widely anticipated to hold the current monetary policy unchanged, rate statement could offer immediate direction.
- Qualitative catalysts will be the key amid a light calendar past-RBA.
AUD/USD remains on the front foot around 0.6975, probing the resistance of the immediate trading range, at the start of Tuesday’s Asian session. That said, the aussie pair seesaws near the highest levels since June 11, flashed the previous day, while also extending the six-day winning streak.
Upbeat data backs risk-on mood to keep the bulls hopeful…
The hopes of further stimulus and an upbeat performance by Chinese equities initially triggered the market optimism during Monday’s Asian session. The trade-positive mood got an additional mood when Australia’s TD Securities Inflation and ANZ Job Advertisements for June came out stronger than expected -1.2% and -0.3%, MoM, to +0.6% and +42.0% respectively. Additionally, the US ISM Non-Manufacturing PMI’s jump back into the expansionary territory, with 57.1 mark versus 50.1 forecast, in June also brightened the mood.
On the contrary, worsening coronavirus (COVID-19) conditions in the US and some parts of Australian, including Melbourne, tamed the optimists. Countering that, China’s Global Times (GT) recently came out with the news suggesting a third trial of the vaccine in Brazil developed by Beijing. Also in the line was the escalating tension between Australia and China as well as among Beijing and Washington. The Dragon nation’s hard stand against Canberra, for pushing investigations on the virus outbreak, pushed markets to rethink over the Aussie-China trade pairing. On the other hand, the US President held back sanctions over the Hong Kong security law but White House suggested a few more punitive measures are in the pipeline. Furthermore, the US aircraft headed to the South China Sea for exercise and suggest further noise between the world’s top two economies.
Against this backdrop, Wall Street welcomed the US traders, after Friday’s off, with a huge smile and NASDAQ’s rise to the record high. Also portraying the upbeat sentiment were the US 10-year Treasury yields that inch close to 0.7000 with near two basis points of a rise.
Moving on, today’s monetary policy meeting by the Reserve Bank of Australia (RBA) becomes the key even if the Aussie central bank isn’t expected to alter the current interest rate neither bond buying. The reason could be spotted in the Australian dollar’s (AUD) strength as well as the Pacific giant’s likely decoupling with China. A mentioning of that might offer a pullback into the currency pair while a song with an upbeat tune could keep quote positive towards a multi-month high.
Read: Reserve Bank of Australia Preview: Policymakers to remain cautiously optimistic
It should be noted that there are no major data/events from the US, except for JOLTS Job Opening for May, expected 4.85M versus 5.046M, which in turn could keep the virus and Chine related news in the driver’s seat.
Technical analysis
The AUD/USD pair’s ability to cross the mid-June top surrounding 0.6975 enables it to pierce 0.7000 threshold. Though, the multi-month high of 0.7065, flashed on June 10, could challenge the quote’s further upside. Meanwhile, 21-day SMA near 0.6905, followed by 0.6900 round-figures, will offer immediate support ahead of a three-week-old support line near 0.6850.
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