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November 15, 2022

AUDUSD pares daily losses near 0.6700

- AUD/USD rebounds from intraday low on RBA Minutes.

- Minutes of the latest RBA Monetary Policy Meeting stated

- Risk-off mood, fears emanating from China exert downside pressure on the risk barometer pair.

- US PPI, risk catalysts should be eyed closely for clear directions.

AUD/USD picks up bids to justify the hawkish statements from the latest Minute Statement of the Reserve Bank of Australia’s (RBA) Monetary Policy Meeting, published early Tuesday. That said, the Aussie pair consolidates the daily loss near 0.6700, down 0.08% intraday at the latest.

As per the latest RBA Minutes, “Board doesn't rule out return to 50bps, or pause.” The publication also mentioned that there is no pre-set path -considered 50bps hike, saw stronger case for 25bps in November.

Despite the mixed statements from the RBA Minutes, the market’s sour sentiment keeps the AUD/USD bears hopeful.

That said, the covid fears of China and the tussles between Washington and Beijing, recently over Taiwan, appear to weigh on the risk appetite. Also challenging the mood could be the comments from the Federal Reserve (Fed) officials.

Recently, the Fed’s Vice Chair for Supervision of the Board of Governors of the Federal Reserve System, Michael Barr mentioned that the inflation is too high. Previously, Vice-Chair Lael Brainard favored a 50 bps rate hike but also stated, “We have additional work to do.” Earlier on Monday, Federal Reserve Governor Christopher Waller also promoted the ideal of a 0.50% rate hike while also warning against the market’s perception of the pivot. Such comments from the US Federal Reserve officials tame optimism surrounding future policy moves and renewed the US Dollar's strength.

Amid these plays, S&P 500 Futures print mild gains but the US 10-year Treasury yields grind higher around 3.87%, which in turn underpins the US Dollar Index (DXY) recovery, up 0.08% intraday near 107.00 by the press time.

Looking forward, the monthly prints of China’s Industrial Production and Retail Sales for October will offer immediate directions to AUDUSD traders. However, the qualitative catalysts, mainly surrounding the coronavirus and the Sino-American tussles, will be more important for a clear guide. Forecasts suggest downbeat prints of the scheduled data/events and hence the AUDUSD bears are likely to keep the reins unless the outcome offers a positive surprise.

Following that, US Producer Price Index (PPI) for October, expected at 8.3% YoY versus 8.5% prior, should also be watched carefully to aptly forecast the near-term AUDUSD moves, especially after the recently hawkish comments from the Fed policymakers.

Technical analysis

Monday’s Doji candlestick joins nearly overbought conditions of the RSI (14) to tease the AUDUSD bears. The pullback moves, however, need validation from July’s low near 0.6680.

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