AUDUSD fails to cheer RBA’s rate hike, downbeat US Dollar ahead of Fed Chair Powell’s Testimony

Traders defend the early-week optimism even as headlines from China appear mixed while waiting for this week’s key event, namely Fed Chair Powell’s testimony. The leading catalysts could be the retreat in the US Treasury bond yields and hopes of more stimulus from China, as well as most positive foreign trade numbers from Beijing. However, the fears of fresh US-China tension and upbeat US Factory Orders, as well as the pre-event anxiety, probed traders from portraying the full risk-on mood.

With this, the US Dollar remains depressed and allowed commodities and antipodeans to grind higher. However, AUDUSD drops amid the RBA’s dovish hike while NZDUSD ignores fears of fresh Sino-American tussles and leads the bulls among the G10 currency pair versus the US Dollar.

USDCHF appears the second biggest gainer of the US Dollar weakness and mixed sentiment whereas GBPUSD also prints mild gains backed by Brexit optimism.

Further, the prices of Gold and Crude oil also print mild gains but the China-linked headlines probe commodity bulls.

BTCUSD remains dicey for the fourth consecutive day while ETHUSD rises half a percent despite a fall in volume profile.

Following are the latest moves of the key assets:

• Brent oil grinds higher at the multi-day top, mildly bid near $86.80 at the latest.
• Gold appears mildly bid near $1,8450 after a downbeat start of the key week.
• USD Index stays depressed near 104.20, down 0.10% intraday as we write.
• Wall Street closed mixed but the equities in the Asia-Pacific region printed mild gains while shares in Europe and the UK traded with smaller losses at the latest.
• BTCUSD and ETHUSD both report mild gains amid a dicey session, near $22,400 and $1,570 levels respectively.

A mixed start to the key day

Having witnessed an optimistic Monday, traders turn cautious as top-tier events loom. Adding strength to the market’s indecision could be the mixed signals flashed by the headlines surrounding China. Furthermore, upbeat US data fails to gain support from the hawkish Fed talks and hence fears of policy pivot weigh on the greenback. Though, recession woes join hopes of higher for longer rates at major central banks to keep the treasury bond yields higher, despite the latest retreat.

Commodities traders expect China’s revival to be able to conquer the hawkish central bank policies and place their buying bets cautiously. Even so, Federal Reserve Chairman Jerome Powell isn’t known as the dove and hence fears stay on the table that the policymakers could reiterate his hawkish comments and renew the market’s fears, as well as the US Dollar’s rise.

AUDUSD could neither cheer RBA’s 10th rate hike nor upbeat comments from Aussie Prime Minister Albanese amid fears of a peak in inflation and sluggish economics. NZDUSD, on the other hand, took clues from the optimism in the Asia-Pacific region to cheer the bulls.

Cryptocurrencies are in their indecisive phase as regulatory fears join the crackdown of the industry majors to weigh on the trading volume.

• Strong buy: USDJPY
• Strong sell: ETHUSD, GBPUSD
• Buy: USD Index, USDCAD, Nasdaq, EURUSD
• Sell: DAX, FTSE 100, gold, BTCUSD, AUDUSD

Nothing more important than Powell

Traders should closely watch Fed Chair Powell’s testimony in front of the Senate Banking Committee as the policymaker may try to defend the bi-annual hawkish monetary policy outlook. Though, the recent US data fails to back such bias and hence USD bears are lurking behind the corner.

May the trading luck be with you!