- AUD/USD recovers losses pilled due to RBA minutes, USD stays mostly flat.
- Sentiment concerning US-China phase one deal stays in the middle of nowhere amid doubts over tariff rollback.
- Australia’s Westpac Leading Index will offer immediate direction while trade headlines can keep the driver’s seat ahead of FOMC minutes.
Following a downbeat reaction to the RBA’s November month monetary policy meeting minutes, AUD/USD recovers to multi-day high while taking the bids near 0.6830 amid the initial Asian session on Wednesday.
The Reserve Bank of Australia’s (RBA) latest monetary policy meeting minutes showed that the board discussed further rate cuts but waited for more clues. With this, odds of another rate reduction from the Aussie central bank in February rallied after the release. However, the same lost its negative impact after the United States (US) President Donald Trump tweeted, “At my meeting with Jay Powell this morning, I protested the fact that our Fed Rate is set too high relative to the interest rates of other competitor countries. In fact, our rates should be lower than all others (we are the US). Too strong a Dollar hurting manufacturers & growth!”
Trade hopes between the US and China keep lingering as the roadblock over tariff is still standing tall with the US President Trump keeping his call for China “to make a deal” else he will “just raise tariffs”.
On the economic front, the US housing market numbers flashes positive signs and the Fedspeak kept praising the current monetary policy.
That said, the US 10-year treasury yields stay under pressure around 1.78% while the S&P 500 Futures down -0.16% by the press time.
Westpac’s October month Leading Index, -0.08% prior, is now on the traders’ radar while news concerning the US-China trade will keep being as a major catalyst. Though, minutes of the Federal Open Market Committee’s (FOMC) latest monetary policy meeting will also be the key to watch. “We expect the FOMC minutes from the October meeting to elaborate on the Committee’s decision to ease rates while also sending a firm signal to set the bar high for additional accommodation. We anticipate discussions to touch upon what “material reassessment” of the outlook would lead the FOMC to shift its policy stance. The minutes may also provide further insights into the Framework Review debate,” says TD Securities.
Technical Analysis
100-day Exponential Moving Average (EMA) near 0.6855 holds the key to pair’s further recovery towards 0.6900 mark while 0.6930/35 area, including 200-day EMA and monthly top, will continue challenging buyers afterward. Meanwhile, 0.6800 and 0.6770 offer near-term key support to the pair.
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