AUDUSD grinds in volatile range after surging the most in three months

After the largest daily gain in three months. AUDUSD bulls pause at 0.6785 as markets get ready for the Reserve Bank of Australia’s (RBA) Interest Rate Announcement early on Tuesday. Traders appear split between a rate 0.25% rate hike and a meeting with the same monetary policy. As evidenced by the Aussie pair’s recent swinging inside a 20-pip trading range.

Australian bulls were able to disregard conflicting data from their own country and China thanks to widespread US Dollar weakening and pre-RBA consolidation.

The AUDUSD pair celebrated general US Dollar weakness. While disregarding the day be fore’s largely negative domestic data as well as that from China, its biggest consumer.

Notwithstanding this, Australia’s TD Securities Inflation for March decreased from 0.4% and 6.3% respectively in February to 0.3% MoM and 5.7% YoY. Caixin Manufacturing PMI for March in China falls from 51.6 to 50.0. antecedent and 51.7 market projections.

The US ISM Manufacturing PMI, on the other hand, fell to its lowest levels since May 2020 in March. Falling to 46.3 from 47.5 projected and 47.7 previously. The final readings for the S&P Global Manufacturing PMI for March decreased from early estimates of 49.3 to 49.2 on a similar note.

The market’s wagers on the Fed were hampered by the unfavorable US PMI data as well as Friday’s weaker. Readings of the US Core Personal Consumption Expenditure (PCE) Price Index. The Fed’s favored inflation gauge. In contrast to the 52% expectations on Friday. This indicated over 43% of market bets on the Fed’s 0.25% rate hike in May.

Market participants thus fail to defend the inflation concerns brought on by the supply reduction from OPEC+. With the recent hawkish remarks made by US Federal Reserve Board Governor Lisa Cook. As well as US Treasury Secretary Janet Yellent’s worries about the impact of the OPEC+ surprise on global growth.

It should be noted that US Vice President Biden dismissed the OPEC+ decision, saying it was not as awful as you thought.

In this environment, the US Dollar Index (DXY) tested its lowest levels in two months the day before Wall Street closed with a mixed performance and lower yields.

A RBA rate hike stall will be important to watch for and might sink the Australian pair.

Future movements of the AUDUSD currency pair depend on the RBA’s actions, since it just missed announcing a 25-basis point (bps) rate hike. Despite the Australian central bank’s announcement of a rate increase, the bears could appear if the RBA Statement makes a change in policy.

AUDUSD Daily Trend