AUD/USD stays defensive above 0.6300 despite upbeat Aussie data, risk-on mood

• AUD/USD retreats from intraday high while struggling to defend two-day uptrend.
• Australia’s Westpac Leading Index improved to 0.0% in September.
• Firmer equities, hawkish RBA Minutes underpin bullish bias but bears flex muscles as yields prepare to rebound.
• Fedspeak, second-tier US data keeps sellers hopeful ahead of Thursday’s Aussie jobs report.

AUD/USD struggles to defend the previous day’s upside break of the 10-DMA hurdle, taking rounds to 0.6315-20 after a two-day uptrend to Wednesday’s Asian session. In doing so, the Aussie pair fails to justify the firmer data from home, as well as the upbeat sentiment, as markets await fresh clues.

Australia’s Westpac Leading Index rose to 0.0% in September from -0.05% prior. On Tuesday, the Monetary Policy Meeting of the Reserve Bank of Australia (RBA), as well as comments from RBA Deputy Governor Guy Bullock, appeared hawkish.

That said, the RBA Meeting Minutes stated that the board weighed a range of arguments for hiking by 50 basis points, as it had for four months straight, but decided to lift the cash rate by 25 basis points to 2.6%. On the same line, RBA Deputy Governor Guy Bullock mentioned that the board expects to increase interest rates further over the coming months. The policymaker also added that the pace and timing will be determined by data.

Elsewhere, the US Dollar Index (DXY) remains sidelined near 112.00 at the latest while the US 10-year Treasury yields seesaw near 4.0% mark to portray the market’s indecision. Alternatively, the S&P 500 Futures rise 0.80% intraday while tracking Wall Street’s second daily gain, which in turn restricts short-term AUD/USD downside due to the pair’s risk-barometer status.

It should be noted that the US dollar fails to capitalize on the firmer industrial production amid the risk-on mood and sluggish Treasury yields. That said, headlines suggesting the Russian soldiers’ struggle in Ukraine and UK Chancellor Jeremy Hunt’s ability to ward off the recession woes seem to propel the market’s optimism of late.

On a different page, Minneapolis Federal Reserve Bank President Neel Kashkari said, “Until I see some compelling evidence that core inflation has at least peaked, not ready to declare a pause in rate hikes.”

Hence, the AUD/USD bulls turn cautious amid the mixed signals and a lack of major data/events as traders prepare for Thursday’s Australia jobs report.

Technical analysis

Unless breaking the 10-DMA support near 0.6300, AUD/USD remains capable of crossing a five-week-old resistance line, around 0.6335 by the press time.