AUD/USD lacks strength for a decisive move above 0.6680 despite hawkish RBA commentary

• AUD/USD has sensed stiff resistance around 0.6680 despite the RBA being open for further interest rate hikes.
• Australian Q1GDP missed estimates as higher interest rates are impacting the overall growth.
• US Goods and Trade Balance are expected to show a wider deficit of $75.2B vs. the prior deficit of $64.2B.

The AUD/USD pair is consistently failing to climb above the immediate resistance of 0.6680 in the European session. The Aussie asset is not getting the required strength despite a hawkish commentary came from the Reserve Bank of Australia.

On Tuesday, RBA Governor Philip Lower raised its Official Cash Rate (OCR) surprisingly by 25 basis points (bps) to 4.10%. RBA’s Lowe cited that despite Australian inflation having peaked now but is extremely far from the desired rate. Therefore, RBA’s Lowe announced that more interest rate hikes are appropriate to keep pressure on inflation.

Investors should note that the monthly Australian Consumer Price Index (CPI) rebounded to 6.8% in April from the 6.4% figure recorded for March.

In the Asian session, the Australian Bureau of Statistics reported weaker-than-anticipated Q1 Gross Domestic Product (GDP) data. Quarterly GDP was expanded by 0.2% while the street was anticipating an expansion of 0.3%, which was revised lower from the prior print of 0.6%. On an annual basis, Q1 GDP dropped to 2.3% vs. the estimates of 2.4% and the former release of 2.6%.

Post the release of Australia’s Q1 GDP data, Australian Treasurer Jim Chalmers said that “rising interest rates are clearly impacting the economic growth,” He further added, “Growth momentum is waning,”

Meanwhile, S&P500 futures have surrendered gains generated in Asia, portraying a decline in the risk appetite of the market participants. The USD Index has extended its recovery to near 104.26 despite the street being mixed about Federal Reserve’s (Fed) policy stance for June monetary policy.

Going forward, United States Goods and Services Trade Balance (April) will remain in focus. The economic data is expected to show a wider deficit of $75.2B vs. the prior deficit of $64.2B.