English
AUD/USD holds stronger over 0.6800 on cautious optimism, with RBA/Fed talk in the spotlight
After reaffirming a two-year bottom, AUD/USD gains bids to remain bullish for a second consecutive day. Fears of aggressive Fed rate rises subside, and the absence of Fedspeak combines with optimism around China to benefit purchasers. Deputy Governor Bullock's remarks in the RBA Minutes will be crucial for new impetus.
AUD/USD continues stronger for a second consecutive day as bulls flirt with the 0.6800 mark, rising 0.20 percent intraday to 0.6810 during the Asian session on Monday. In doing so, the Aussie pair draws cues from the weaker US dollar and modestly optimistic market mood to keep buyers optimistic ahead of a hectic week.
In spite of this, the US Dollar Index (DXY) extends Friday's losses to 107.75, a loss of 0.22 percent intraday, as traders reduce their hawkish forecasts for the next Fed action. However, recent dovish Fed wagers appear to have been reduced due to primarily negative US data and conflicting Fed commentary.
US Retail Sales for June increased 1.0 percent month-over-month compared to 0.8 percent expected and -0.1 percent before (updated from -0.3 percent), while the University of Michigan's Consumer Confidence Index in July's flash estimate increased to 51.5 from 49.9 expected and 50.0 prior. At 47.3, the Index of Consumer Expectations reached its lowest level since May 1980. In addition, the US Industrial Production decreased by 0.2% month-over-month in June, while the New York Empire State Manufacturing Index jumped to 11.1 from -2.0 and -1.2 before.
In addition to the mixed data, a Fedspeak pullback from prior forecasts for a 75 basis point rate rise spurred a rebound in the AUD/USD pair. As reported by Reuters, Atlanta Fed President Raphael Bostic stated on Friday that the 75 basis point rate rise in June was a "major shift" and that the Fed desires an orderly policy change. Mary Daly, president of the Federal Reserve Bank of San Francisco, stated on Friday that the Fed is aiming to reduce inflation without stifling the economy. Further, St. Louis Federal Reserve Bank President James Bullard sounded indifferent when he told Reuters on Friday that a 100 basis point (bps) or 75 basis point (bps) rate rise at the next meeting wouldn't make much of a difference.
Moreover, the Fed's blackout period preceding the FOMC meeting in late July, China's preparation for additional stimulus, and hawkish expectations from the European Central Bank (ECB) all give weight to the AUD/upside.
Wall Street concluded the week on a positive note, but US Treasury rates ended on a negative note. However, S&P 500 Futures stay stronger at 3,870 as 10-year US Treasury yields fall 1.1 basis points (bps) to 2.91 percent as per the latest available data.
In the future, risk triggers might interest AUD/USD traders despite a sparse domestic schedule. Nevertheless, Tuesday's Minutes Statement from the Reserve Bank of Australia (RBA) and remarks from RBA Deputy Governor Guy Bullock will be crucial for pair traders to monitor.
Bonus rebate to help investors grow in the trading world!
