AUD/USD grinds above 0.7100 on Hong Kong trading resumption, hawkish bets on RBA, focus on US GDP

• AUD/USD seesaws around five-month high, up for the fifth consecutive day.
• Hong Kong’s upbeat return after five-day holidays, Tesla earnings underpin favor firmer sentiment.
• Strong Aussie inflation renewed talks of RBA’s 0.25% rate hike versus previous chatters of policy pivot.
• US Q4 GDP, PCE Price data will be crucial for clear directions ahead of next week’s FOMC.

AUD/USD clings to mild gains above 0.7100 as bulls take a breather after refreshing the five-month high during early Thursday in Europe.

That said, the Aussie pair traders cheer Hong Kong’s resumption of trading after five days, as well as hawkish hopes of the Reserve Bank of Australia (RBA) after the previous day’s strong Aussie inflation data. However, a cautious mood ahead of the first readings of the US fourth quarter (Q4) Gross Domestic Product (GDP) seems to challenge the quote’s upside. Additionally probing the AUD/USD buyers is the Australia Day holiday.

Hong Kong’s equity benchmark Hang Seng leads the Asia-Pacific gainers with above 2.0% gains by the press time even if markets in Australia, India and China are closed. The reason for the upbeat sentiment could be linked to the market chatters suggesting strong holiday spending in China.

Elsewhere, the reversal in the previous talks of the RBA’s policy pivot, especially after the upbeat Aussie Q4 and monthly Consumer Price Index (CPI) data, also underpins the AUD/USD pair’s upside moves. As per the latest market chatters, the odds favoring the RBA’s 0.25% hike are back on the table after a brief absence.

It should be noted that the upbeat performance of Tesla jostles with Microsoft’s risk-negative headlines to offer a mixed move to the S&P 500 Futures and challenge the risk-barometer AUD/USD pair. However, the downbeat US Treasury bond yields and the broad US dollar weakness ahead of the key data keep the buyers hopeful.

Looking forward, the US Q4 GDP and Personal Consumption Expenditure (PCE) Price data will be important for the immediate direction. Also crucial will be the US Durable Goods Orders and trade data for December. That said, the downbeat expectations from the scheduled US data keep the pair buyers in the driver’s seat but a positive surprise could trigger a notable reaction ahead of the next week’s Federal Open Market Committee (FOMC) meeting.

Also read: US Gross Domestic Product Preview: Three reasons to expect a US Dollar-boosting outcome

Technical analysis

Higher highs on RSI (14) contrast with the lower high on AUD/USD prices and challenge the current bullish trend. As a result, multiple highs marked since June 2022, near 0.7140 will be the key to watch.

Also read: AUD/USD Price Analysis: Steadies around 0.7100 amid hidden bearish RSI divergence