AUD/USD flirts with 0.6700 even as hawkish wagers on RBA subside, Fed’s Powell eyed

  • November 30, 2022
  • AUD/USD picks up bids to poke intraday high, extend the previous day’s rebound.
  • Hawkish bets on RBA slumped after disappointing Aussie inflation data.
  • China PMIs fail to stop buyers amid Covid-linked optimism.
  • Markets seem to prepare for the hawkish comments from Fed Chair Jerome Powell.

AUD/USD fails to justify downbeat Australia inflation data, as well as disappointing activity numbers from China, as traders brace for the Federal Reserve (Fed) Chairman Jerome Powell’s speech early Wednesday. That said, the Aussie pair pokes intraday high near 0.9705 during the two-day uptrend.

It’s worth noting that the cautious optimism, mainly linked to China’s Covid conditions and easing of the virus-led activity restrictions, also seemed to have underpinned the AUD/USD pair’s upside momentum of late.

That said, Australia’s Monthly Consumer Price Index (CPI) dropped below 7.4% market forecasts and 7.3% prior to 6.9% while justifying the Reserve Bank of Australia’s (RBA) latest dovish. Following the data, Reuters mentioned that the markets are still wagering the RBA will raise its cash rate by another 25 basis points to 3.1% at its December policy meeting next week. “Yet they also trimmed the expected peak for interest rates to around 3.6%, from 3.7% before the CPI release and as much as 4.20% last month,” added the news.

On the other hand, a second consecutive daily fall in China’s covid numbers from an all-time high backed the nation’s optimism over tackling the pandemic woes. Even so, Beijing reported disappointing activity data for November, which in turn suggests more easing from the People’s Bank of China (PBOC) and indirectly signaled more demand for Australia, due to the Aussie-Sino ties.

Looking forward, AUD/USD bulls are likely to witness hardships amid hawkish hopes from Fed Chair Jerome Powell, even if chatters surrounding easy hikes may persist. Also important to watch will be an early signal for Friday’s United States Nonfarm Payrolls (NFP), namely the ADP Employment Change for November, as well as the second readings of the US Gross Domestic Product (GDP) for the third quarter (Q3).

Technical analysis

AUD/USD remains bearish unless crossing the previous support line from November 10 and a fortnight-long resistance line, close to 0.6770 by the press time.