AUD/USD drifts back closer to session lows, still comfortable above 0.6900 mark
- AUD/USD built on the overnight gains and gained some follow-through traction on Tuesday.
- The upbeat market mood and sustained USD selling remained supportive of the momentum.
- The pair, however, lost momentum following the release of the RBA policy meeting minutes.
- Investors now look forward to the US retail sales data, Powell’s testimony for a fresh impetus.
The AUD/USD pair surrendered early gains to multi-day tops and was last seen trading near the lower end of its daily range, around the 0.6920-25 region.
The pair built on the previous day's goodish intraday bounce of around 150 pips from near two-week lows and gained some follow-through traction through the Asian session on Tuesday. The uptick was supported by a combination of factors, including the prevalent US dollar selling bias and the upbeat market mood.
The Fed on Monday announced that it will start purchasing a diversified range of investment-grade US corporate bonds to support markets and ensure credit market liquidity amid the coronavirus pandemic. The move helped offset renewed fears about the second wave of COVID-19 infections and boosted investors' confidence.
The risk-on flow was evident from a strong positive move across the global equity markets, which undermined the US dollar's relative safe-haven status and benefitted perceived riskier currencies, like the aussie. The USD bulls failed to gain any respite from a strong intraday pickup in the US Treasury bond yields.
The early uptick, however, lacked any strong follow-through, rather lost momentum after the RBA – in the latest monetary policy meeting minutes released this Tuesday – showed readiness to extend the policy support as long as required. The RBA also highlighted the downside risks of the coronavirus on the domestic economy.
It will now be interesting to see if the pair is able to attract any dip-buying at lower levels or the intraday pullback of around 50 pips marks the resumption of the recent corrective slide from YTD tops set last Wednesday.
Moving ahead, market participants now look forward to the release of the US monthly retail sales figures for a fresh impetus. This along with the Fed Chair Jerome Powell's testimony before the Senate Banking Committee will influence the USD price dynamics and eventually produce some meaningful trading opportunities around the AUD/USD pair.
Technical levels to watch