AUD/USD bulls keep the reins beyond 0.6390 support amid risk-on mood, focus on Fed

• AUD/USD picks up bids to renew intraday high, prints mild gains though.
• Headlines from China, mixed Aussie data join downbeat DXY to favor the pair buyers.
• Pre-Fed anxiety restricts the quote’s immediate upside amid indecision over the FOMC’s plan for December.

AUD/USD remains mildly bid around 0.6400, refreshing intraday high to 0.6407 by the press time, as the US dollar eases ahead of the Fed’s verdict on Wednesday. The recently released risk-positive updates from China also add strength to the Aussie pair’s rebound from the 10-DMA support. However, mixed housing data from Australia and hawkish Fed bets challenge the bulls.

That said, Australia’s Building Permits for September dropped by 5.8% MoM versus the previous growth of 28.1% and -7.0% expected while the yearly figure printed a 13.0% contraction compared to -9.5% prior. Elsewhere, the Aussie Home Loans also dropped during the stated month to -9.3% versus -2.5% market consensus and -2.7% prior. Furthermore, Investment Lending for Homes slumped to -6.0% from -4.8% prior.

Elsewhere, the Governor of the People’s Bank of China (PBOC), Yi Gang, recently crossed wires and stated that China's economy remains broadly on track. “We hope the housing market can achieve a soft landing,” added the policymaker. Additionally, an official from the China Banking and Insurance Regulatory Commission (CBIRC) also helped improve the mood while saying that the property sector is now "stable".

It should be noted that the softer US Treasury yields also weigh on the US dollar and favor the AUD/USD buyers. US 10-year Treasury yields drop two basis points (bps) to 4.03% at the latest as traders remain divided over the US central bank’s next move given the 75 bps rate hike and hopes favoring easy rate lifts from December.

Amid these plays, S&P 500 Futures snap a two-day downtrend to print a 0.25% intraday upside by the press time.

Looking forward, risk catalysts may entertain the AUD/USD pair traders ahead of the key Federal Open Market Committee (FOMC) announcements. Should the Fed refrain from slowing down the rate hikes, the AUD/USD may witness a setback.

Technical analysis

Despite the latest rebound from a 10-DMA support near 0.6390, a downward-sloping resistance line from early August, close to 0.6480 by the press time, challenges the AUD/USD pair’s upside momentum.