AUDUSD flirts with 0.6700 on an eventful day amid mixed concerns

• AUDUSD recovers from intraday low after an inactive start to the week.
• Downbeat China data, hawkish RBA Minutes and the PBOC inaction failed to impress AUDUSD traders.
• Absence of major risk-negative headlines from G20 favors buyers amid sluggish session.
• Aussie Wage Price Index, US Retail Sales could entertain traders, risk catalysts are the key.

AUDUSD portrays the market’s cautious optimism during early Tuesday in Europe, up 0.10% intraday near 0.6710 at the latest. In doing so, the Aussie pair struggles to justify multiple data/events published earlier in the day from Canberra, as well as from Beijing, amid mildly positive headlines from the Group of 20 Nations (G20) meeting in Indonesia.

As per the latest RBA Minutes, “Board doesn't rule out return to 50bps, or pause.” The publication also mentioned that there is no pre-set path -considered a 50bps hike, saw the stronger case for 25bps in November.

On the other hand, China’s Retail Sales marked the lowest print in five months, to -0.5% YoY versus 1.0% expected and 2.5% prior, whereas the Industrial Production (IP) also dropped to 5.0% growth versus 5.2% market forecasts and 6.3% previous readings during October.

Elsewhere, the recently firmer Covid numbers from the dragon nation also propel the USDCNH price as Guangzhou reports 5,124 new local Covid-19 cases as of 00:00 November 15, 2022. With this, the daily numbers turn out to be double what they were over the weekend.

“A positive sign on the eve of the summit was a three-hour bilateral meeting between U.S. President Joe Biden and Chinese leader Xi Jinping in which the two leaders pledged more frequent communications despite many differences,” stated Reuters.

It should be noted that the concerns over major rate hikes challenge the AUDUSD buyers. That said, the Fed’s Vice Chair for Supervision of the Board of Governors of the Federal Reserve System, Michael Barr mentioned that the inflation is too high. Previously, Vice-Chair Lael Brainard favored a 50 bps rate hike but also stated, “We have additional work to do.” Earlier on Monday, Federal Reserve Governor Christopher Waller also promoted the ideal of a 0.50% rate hike while also warning against the market’s perception of the pivot. Such comments from the US Federal Reserve officials tame optimism surrounding future policy moves and renewed the US Dollar's strength.

Against this backdrop, S&P 500 Futures print mild gains but the US 10-year Treasury yields grind higher around 3.87%, which in turn challenges the US Dollar Index (DXY) recovery near 107.00 by the press time.

Looking forward, risk catalysts are important for the AUDUSD pair traders ahead of the US Producer Price Index (PPI) for October, expected at 8.3% YoY versus 8.5% prior, as well as the US Retail Sales for the said month. Additionally important will be Australia’s third quarter (Q3) Wage Price Index data, up for publishing on Wednesday.

Technical analysis

A clear upside break of the 100-DMA, around 0.6700 by the press time, becomes necessary for the AUDUSD bulls to keep the reins. Following that, the mid-September swing high near 0.6770 should lure buyers.

Alternatively, bears remain off the table unless witnessing a clear break of the 50-DMA support, around 0.6500 by the press time.