AUD/USD ignores downbeat Australia Retail Sales below 0.7100, RBA in focus
- AUD/USD paid a little heed to Aussie Retail Sales for December amid pre-RBA caution.
- Australia Retail Sales shrank 4.4% MoM versus 3.9% expected, 7.3% prior.
- Market sentiment dwindles with firmer US Treasury yields testing equity buyers amid mixed updates concerning Fed, Russia.
- Hawkish expectations from RBA could disappoint bulls, Fespeak, US ISM PMI are eyed as well.
AUD/USD keeps the intraday grind near 0.7060-70 despite a strong miss of the Aussie Retail Sales during Tuesday’s Asian session. In doing so, the Aussie pair portrays the cautious mood among the traders ahead of the key Reserve Bank of Australia (RBA) monetary policy meeting.
Australia Retail Sales for December marked the lowest prints since mid-2020, -4.4% MoM compared to 3.9% forecast and 7.3% prior, while portraying the virus-led economic impacts. Even so, the AUD/USD remains indecisive while consolidating the previous day’s gains in a tight range.
In addition to the pre-RBA cautious, mixed signals from the Fed, also concerning Russia, seem to challenge the AUD/USD pair traders due to its risk-barometer status.
After the Fed’s hawkish halt propelled expectations of the 50 basis points (bps) of a rate hike in March, multiple Fed policymakers’ refrain to back the bold move allowed markets to consolidate the previous week’s moves on Monday. Among the key Fed speakers were Atlanta Fed President Raphael Bostic and Kansas City Fed President Esther George, not to forget Federal Reserve Bank of San Francisco President Mary Daly.
On a different page, the Washington Post (WaPo) conveyed the news of Russian response to the US proposal over Ukraine, citing an anonymous Senior Diplomat. “The Russian government has delivered a written response to a U.S. proposal aimed at de-escalating the Ukraine crisis.” It’s worth noting that UK PM Boris Johnson is also scheduled to visit Ukraine on Tuesday whereas US Secretary of State Antony Blinken and Russian Foreign Minister Sergei Lavrov will also hold meetings today.
It’s worth noting that the market’s wait for the key European Central Bank (ECB) meeting, up for publishing on Thursday and Friday’s US jobs report also challenges the AUD/USD moves as the US Treasury yields remain lackluster while the S&P 500 Futures print mild losses of late.
Moving on, AUD/USD pair traders will keep their eyes on the RBA’s verdict amid hopes of witnessing an upward revision to the inflation forecasts and a message conveying a formal end to the A$350 billion bond-buying program. It’s worth noting that the Aussie central bank isn’t expected to alter the benchmark rate, which it previously said to keep intact at least until 2023. However, Goldman Sachs’ Australia Economist Boak recently mentioned that the Aussie economy matched all the three criteria required for an RBA hike, which in turn keeps AUD/USD bulls hopeful.
Read: Reserve Bank of Australia Preview: A hawkish surprise from Lowe & Co?
Technical analysis
Although AUD/USD bulls bounced off an 18-month low, a downward sloping resistance line from January 20, near 0.7085, guards the immediate recovery ahead of another resistance line from January 13, close to 0.7130.
Alternatively, the 0.7000 threshold will precede the year 2021 low and the recent bottom, respectively around 0.6995 and 0.6965, to challenge the AUD/USD sellers.