AUD/USD consolidates its gains above the mid-0.6500s ahead of RBA Minutes

• AUD/USD oscillates in a narrow range, nearing fresh monthly highs in early Tuesday.
• Market players have priced in a 100 basis point (bps) rate cut in the first half of 2024.
• More optimistic about additional Chinese stimulus measures and an end of the Fed's rate hike cycle lift the AUD.
• The RBA and FOMC Meeting Minutes will be in the spotlight on Tuesday.

The AUD/USD pair consolidates its recent gains to nearly fresh monthly highs during the early Asian session on Tuesday. The risk appetite and lower US Treasury yields exert some selling pressure on the US Dollar (USD), which lends support to the AUD/USD. Meanwhile, the US Dollar Index (DXY) dropped to 103.45, the lowest since late August. At the time of writing, AUD/USD is holding lower ground near 0.6557, losing 0.06% on the day.

US Treasury yields edge lower and US equities were marginally higher at the start of US Thanksgiving. With little economic data forthcoming, the attention will be on the minutes of the FOMC meeting, which are expected to be released late Tuesday. The report may include signals regarding future policy rate direction and inflation improvement. Market players raised their bets that the Federal Reserve (Fed) is done raising the interest rate and have priced in a 100 basis point (bps) rate cut in the first half of 2024.

On the other hand, commodity prices rose as investors became more optimistic about additional Chinese stimulus measures and the end of the Fed's rate hike cycle. This, in turn, boosts the China-proxy Australian Dollar (AUD). The Reserve Bank of Australia (RBA) Governor Michele Bullock will deliver a speech on Tuesday and RBA will also publish the minutes of its recent meetings later.

Markets anticipate a rate cut in 2024, but the RBA is still attempting to convince markets that rate hikes are still on the table and it is not talking about cutting rates. If the statement delivers a surprisingly hawkish tone, this could lift the AUD and act as a tailwind for the AUD/USD pair.

Looking ahead, market players will closely watch the RBA Meeting Minutes and RBA Governor Michele Bullock’s speech. The US Existing Home Sales and the Chicago Fed National Activity Index will be released on Tuesday ahead of the FOMC Meeting Minutes from its latest meeting. Traders will take cues from these figures and find trading opportunity around the AUD/USD pair.