AUD/USD clings to mild gains near 0.6700, RBA Minutes, PBOC Interest Rate Decision eyed
- AUD/USD stays mildly bid above 100-DMA after a sluggish week start, picks up bids of late.
- Market sentiment dwindles as China-linked optimism battles with recession fears amid light calendar and holiday mood.
- Bears may seek confirmation of slower rate hikes from RBA Minutes, rest is history.
- PBOC is likely to keep benchmark interest unchanged at 3.65%.
AUD/USD grinds near the 0.6700 threshold as bulls keep the reins despite showing minor moves ahead of the key events on Tuesday.
The Aussie pair began the week on a firmer footing amid a softer US Dollar and upbeat headlines from China but pared some gains as equities dropped and yields rose. However, the buyers are in the driver’s seat as markets braces for the latest Monetary Policy Meeting Minutes from the Reserve Bank of Australia (RBA) and the Interest Rate Decision from the People’s Bank of China (PBOC).
US Dollar Index (DXY) began the week on a back foot as downbeat US PMIs for December raised doubts about the US Federal Reserve’s (Fed) hawkish bias. Adding strength to the DXY fall were the firmer data from Germany and comments suggesting stronger rate increases from the European Central Bank (ECB).
Elsewhere, Chinese policymakers showed readiness for more stimulus at the annual Central Economic Work Conference. "We must insist on stability first next year while we strive for progress,” stated the leaders. However, a fall in China’s business sentiment, according to a survey conducted by the World Economics Survey, to the lowest levels in a decade probed the AUD/USD bulls.
It should be noted that a light calendar allowed market bears to keep the reins after the latest week’s central bank moves, which in turn joined inflation fears to weigh on the equities and propel the Treasury bond yields, as well as limiting the US Dollar’s fall.
Looking forward, RBA Minutes could act as an immediate catalyst for the AUD/USD pair traders as the Aussie central bank appears less convinced in following the global counterparts and rather seems to tilt towards the doves, which if confirmed might recall the pair sellers. Following that, the PBOC Interest Rate decision may entertain traders if providing any surprise change in the benchmark rate of 3.65%.
Technical analysis
Although the 100-DMA restricts the immediate downside of the AUD/USD pair to around 0.6665, an upward-sloping support line from November 21, close to 0.6735 at the latest, challenges the upside momentum. That said, RSI and MACD suggest further grinding towards the south.