AUD/USD pares intraday gains above 0.7100 on RBA Minutes, risk-off mood

• AUD/USD retreats from daily top as bulls struggle to keep the bounce off one-week low.
• RBA Minutes reiterated readiness to be patient, cited achievement of goals within sight for the first time in several years.
• Market sentiment sours amid Ukraine-Russia chatters, hawkish Fedspeak.
• US data, Fedspeak will add burden to the watchers’ list, risk catalysts are the key.

AUD/USD steps back from intraday high to 0.7130 as RBA Minutes fail to support the pair’s early Asian session corrective pullback during Tuesday. Also challenging the Aussie pair buyers is the weaker risk appetite amid Russia-linked headlines and Fedspeak, due to the quote’s risk barometer status.

That said, the latest Minutes of the Reserve Bank of Australia (RBA) monetary policy meeting stated, “Members observed that the achievement of the goals was within sight for the first time in several years.” However, the comments line, “Board is prepared to be patient as it monitors how the various factors affecting inflation in Australia evolve,” challenged AUD/USD buyers.

Read: RBA minutes: Members observed that inflation had picked up more quickly than the bank had expected

On the other hand, headlines covering Russian Foreign Minister Sergey Lavrov initially helped the markets to stay optimistic over no imminent fears of the Russia-Ukraine war, as he showed likes for the US proposals. However, comments like, “EU and NATO responses have not been satisfactory,” kept the risk-off mood high.

Also challenging the market sentiment were comments from St. Louis Fed President James Bullard who repeated his call for 100 basis points (bps) in interest rate hikes by July 1 by citing the last four inflation reports which show broadening inflationary pressures.

Amid these plays, the US Treasury yields consolidate the previous day’s recovery moves with the fresh drop to 1.979%, down 1.7 basis points (bps) whereas S&P 500 Future print mild losses at the latest. On Monday, the bond coupons regained upside momentum after stepping back from a 2.5-year high on Friday whereas the Wall Street benchmark closed in the red, despite mildly positive week-start performance.

Having witnessed the initial market reaction to the RBA Minutes, AUD/USD pair traders will keep their eyes on the risk catalysts. Also important will be, the US Producer Price Index (PPI) for January, expected 9.1% YoY versus 9.7% prior, as well as the Empire State Manufacturing Index for February, bearing the market consensus of 12 versus -0.7% previous readouts.

Technical analysis

The 21-DMA and previous support line from January 28, respectively around 0.7135 and 0.7160, restrict the short-term upside of the AUD/USD prices ahead of the key 100-DMA resistance surrounding 0.7245.

Meanwhile, 0.7080 and the 0.7000 threshold may entertain short-term sellers.