AUD/USD bulls again aim for 0.6800 amid PBoC rate cut, mixed Aussie data, US inflation eyed

• AUD/USD picks up bids to refresh intraday high amid broad US Dollar weakness, cautious optimism.
• PBoC cuts benchmark Repo Rate to 1.9%, market sentiment improves amid dovish Fed bets.
• Statistics from Australia have been mixed of late but markets cheer hopes of downbeat US inflation and no rate from FOMC.

AUD/USD justifies the market’s cautious optimism, as well as cheering the rate cut from the Chinese central bank, as it renews its intraday high near 0.6765 heading into Tuesday’s European session. That said, receding odds of the Federal Reserve’s (Fed) hawkish move during Wednesday’s Federal Open Market Committee (FOMC) weigh on the US Dollar and improve the market’s mood.

That said, the CME’s FedWatch Tool suggests more than 70% chance of the Fed’s inaction on Wednesday while suggesting nearly 80% odds favoring the 0.25% rate increase in July.

It should be noted that the People’s Bank of China (PBoC) cuts the Repo Rate to 1.9% from 2.0% and confirms the previous fears suggesting slower economic growth in the world’s biggest industrial player. With this in mind, Bloomberg said, “China’s central bank cut a short-term policy interest rate, easing its monetary stance to help aid the economy’s recovery.”

At home, Australia’s Westpac Consumer Confidence improves to 0.2% for June versus 0.0% expected and -7.9% prior. However, sentiment figures from the National Australia Bank (NAB) came in downbeat for May and prod the Aussie pair buyers.

It’s worth mentioning that the latest fears of the stiff US-China tension also should have challenged the AUD/USD bulls. On Monday, the US expands its ban on imports from Xinjiang. China vows to protect China firms against any US sanctions, per Reuters. Recently, Bloomberg released prepared remarks of US Treasury Secretary Janet Yellen’s scheduled Testimony in front of the House Financial Services Committee as she said that the International Monetary Fund (IMF) and the World Bank (WB) serve as important counterweights to non-transparent, unsustainable lending from others, like China.

Above all, the Reserve Bank of Australia’s (RBA) hawkish surprise contrasts with the dovish bias of the Fed to keep the AUD/USD buyers hopeful amid a lackluster market before the key data/events.

Looking ahead, AUD/USD traders should pay attention to today’s US Consumer Price Index (CPI) figures for May as the Fed decision looms on Wednesday is bearing expectations of no rate change. It’s worth noting that the market forecasts of witnessing no change in the Core CPI MoM figure of 0.4% is in the spotlight as softer figures could push back the July rate hike concerns and may not allow the Fed to sound hawkish.

Also read: US Inflation Preview: Why the US Dollar is more likely to fall than rise, three scenarios

Technical analysis

A daily closing beyond the four-month-old previous resistance line, now immediate support around 0.6735, directs the AUD/USD bulls towards the previous monthly high of near 0.6820.