AUD/USD marches towards 0.6750 ahead of RBA minutes, Fed policy eyed

• AUD/USD is scaling higher towards 0.6750 as the negative market sentiment has trimmed.
• The Fed looks to announce a surprise hike by a full percent to fix the inflation chaos.
• A detailed version of the RBA monetary policy will support investors in making informed decisions.

The AUD/USD pair is hovering around the critical hurdle of 0.6730 in the early Tokyo session. The asset is advancing towards the crucial resistance of 0.6750 as the risk-on profile accelerates. On Monday, the asset witnessed a firmer rebound after defending the novel two-year low at 0.6670, recorded last week.

The asset displayed a firmer rebound after the US dollar index (DXY) witnessed a steep fall while attempting to recapture the two-decade low at 110.79. The DXY slipped despite the soaring odds of an extreme hawkish stance on interest rates by the Federal Reserve (Fed). The monetary policy meeting is scheduled for September 22 and investors are expecting a third consecutive rate hike by 75 basis points (bps). An occurrence of the same will push the interest rates to 3.00-3.25%.

The DXY has surrendered the majority of its gains but that doesn’t warrant a bearish reversal as investors are also expecting a surprise rate hike with a higher-than-expected extent. Considering the stubbornness in the price pressures, a rate hike by a full percent could be announced. The Fed has room to take a bold decision amid a supportive labor market and robust retail demand.

On the Aussie front, investors are awaiting the release of the Reserve Bank of Australia (RBA) minutes, which will provide the ideology of RBA Governor Philip Lowe behind announcing the fourth consecutive rate hike. Also, a detailed version of the economic situation of Australia and its economic catalysts such as growth rate, trade activities, and demand pattern will be of utmost importance.