AUD/USD refreshes daily peak, 0.6300 mark back in sight amid notable USD supply

• AUD/USD regains some positive traction on Monday amid broad-based USD weakness.
• Retreating US bond yields, along with the risk-on impulse, weighs on the safe-haven buck.
• Disappointing US macro data adds to the USD selling bias and provides an additional lift.

The AUD/USD pair builds on its steady intraday ascent and hits a fresh daily high, around the 0.6285 region during the early North American session.

The US dollar comes under renewed selling pressure on Monday, which, in turn, assists the AUD/USD pair to attract some buying near the 0.6200 mark and recover a major part of Friday's losses. Retreating US Treasury bond yields turns out to be a key factor weighing on the greenback. Apart from this, the risk-on impulse - as depicted by a strong rally in the equity markets - further undermines the safe-haven buck and benefits the risk-sensitive aussie.

The intraday USD selling picks up pace in reaction to the disappointing release of the Empire State Manufacturing Index, which plunged to -9.1 for October from -1.5 in the previous month. That said, a combination of factors might hold back traders from placing aggressive bullish bets around the AUD/USD pair. Investors remain concerned about the potential economic headwinds stemming from rapidly rising borrowing costs and geopolitical tensions.

Furthermore, China's zero-COVID policy has been fueling worries about a deeper global economic downturn and should keep a lid on any optimistic move in the markets. Apart from this, the prospects for a more aggressive policy tightening by the Fed should limit the USD losses and cap the upside for the AUD/USD pair. In fact, the markets have priced in a nearly 100% chance of another supersized 75 bps Fed rate hike move at the November policy meeting.

This, along with the Reserve Bank of Australia's (RBA) decision to slow the pace of policy tightening earlier this month, suggests that the path of least resistance for the AUD/USD pair is to the downside. Hence, the ongoing recovery move might still be seen as a selling opportunity and runs the risk of fizzling out rather quickly.

Market participants now look forward to the RBA monetary policy meeting minutes and top-tier Chinese macro data, due for release during the Asian session on Tuesday. This will drive the China-proxy Australian dollar and provide some meaningful impetus to the AUD/USD pair. In the meantime, the USD price dynamics will continue to play a key role in influencing spot prices and allow traders to grab short-term opportunities.

Technical levels to watch