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AUD/USD reaches 0.6900 with market apprehension ahead of an RBA rate rise
AUD/USD maintains week-beginning optimism and oscillates within an immediate range as of late. Softer Australian statistics and higher US Treasury rates combine with pre-RBA prudence to challenge the rebound. Attention must also be paid to US Factory Orders, Sino-American trade headlines, and covid news for a clear guidance.
AUD/USD maintains its week-beginning comeback as it approaches the crucial 0.6900 barrier, trading around 0.6875 during Tuesday's Asian session. The stronger performance of the quotation may be attributable to the market's cautious optimism as well as the weaker US dollar. However, bulls look apprehensive before to the Reserve Bank of Australia's (RBA) Interest Rate Decision.
As buyers withdraw from a two-week high, the US Dollar Index (DXY) struggles to preserve its two-day rise to 105.00. Dollar bulls appear to have done so in response to rising Treasury rates. Notable is the fact that benchmark 10-year Treasury bond rates maintain the earlier U-turn from a one-month low at about 2.92 percent, up three basis points (bps) from Friday's close.
Although the US holiday did not provide much solace for bond bears, stronger prints of German Bunds and buzz about the US conversation on lifting Trump-era tariffs on China appeared to have supported US Treasury rates. The rates on 10-year German Bunds increased by a minimum of 10 basis points to 1.32 percent.
In relation to Australian statistics, the AiG Performance of Construction Index for June decreased to 46.2, below the preceding level of 50.4, while the S&P global Composite PMI and Services PMI reaffirmed the initial projection of 52.6% for June.
In the meanwhile, economic worries and China's covid difficulties join Russia's claim of gaining entire authority in Lysychansk, not to mention the pre-RBA jitters, to test the pair buyers.
Moving forward, US Factory Orders for May, anticipated at 0.5 percent vs 0.3 percent, should interest AUD/USD traders, but considerable attention should be paid to risk triggers, as well as pre-NFP emotions, not to mention the markets' reaction to the lately stronger bond rates.
Noting that the RBA's 0.50 percent rate rise is already a certainty and appears to have been priced in, Tuesday's RBA Rate Statement will likely provide additional impetus. If the policy statement suggests further rate hikes, the AUD/USD may prolong its recent rally, at least for the time being.
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