AUD/USD struggles near 0.6650, RBA’s Bullock, US inflation and Fed Minutes eyed

• AUD/USD eases near one-month low after snapping five-day downtrend.
• Cautious mood ahead of the key catalyst, mixed sentiment challenge Aussie pair buyers.
• Upbeat Aussie data, barley deal supersede price-negative catalysts surrounding China to keep buyers hopeful.
• RBA’s Bullock needs to follow Lowe’s footsteps to defend AUD/USD rebound.

AUD/USD retreats to 0.6650, after bouncing off the lowest level in one month, as traders await the top-tier data/events during early Wednesday. In doing so, the Aussie pair portrays the market’s cautious mood even as upbeat catalysts at home joined US Dollar weakness to lure the bull previously.

That said, Australia’s Westpac Consumer Confidence for April rallied to the highest levels since June 2022, printing 9.4% figure versus 0.8% expected and 0.0% prior. Further, the National Australia Bank’s (NAB) Business Conditions matched the forecast figure of 16.0, versus 17.0 prior, whereas NAB Business Confidence eased to -1.0 versus 0.0% expected and -4.0% previous readings.

On the same line, Australia's Foreign Minister Penny Wong said on Tuesday, "We reached an agreement with China to settle the dispute over Australian barley.” “China agreed to review the duties levied on Australian barley,” Wong added.

Further, China’s ending of military strikes near Taiwan and mixed comments from the US Federal Reserve (Fed) officials also allowed the AUD/USD bulls to remain firmer. However, the market’s receding optimism towards the further rate hikes and mixed comments from the International Monetary Fund (IMF), as well as softer China inflation, to prod the AUD/USD.

However, downbeat China inflation numbers prod the AUD/USD bulls as headline inflation numbers for March, namely the Consumer Price Index (CPI) and Producer Price Index (PPI), came in 0.7% YoY and -2.5% YoY versus 1.0% and -1.4% respective priors.

Recently, Philadelphia Fed President Patrick Harker said on Tuesday that the Federal Reserve will continue to look closely at available data to determine what, if any, additional actions they may need to take. Before him, Federal Reserve (Fed) Bank of New York President John Williams said that if inflation comes down, we will have to lower rates. Furthermore, Chicago Fed President Austan Goolsbee, said on Tuesday that they need to be cautious about raising interest rates after recent development in the banking sector.

On the other hand, Reuters said that China ended three days of military drills around Taiwan on Monday saying they had tested integrated military capabilities under actual combat conditions, having practiced precision strikes and blockading the island that Beijing views as its own.

Elsewhere, IMF revised down global real Gross Domestic Product (GDP) growth forecast for 2023 to 2.8% from 2.9% in January's report. However, the global lender kept growth estimations for China intact as 5.2% for 2023 and 4.5% for 2024.

Amid these plays, Wall Street closed with minor gains and the yields also marked mild run-up while the US Dollar Index (DXY) snapped four-day uptrend on Tuesday.

Moving on, RBA Assistant Governor (Financial System) Michele Bullock could offer immediate directions to AUD/USD pair ahead of the key US CPI and the Fed Minutes.

Also read: US CPI Preview: US Dollar on the back foot and poised to fall further

Technical analysis

AUD/USD recovery remains elusive unless it bouncing back beyond the one-month-old previous support line, around 0.6700 by the press time.