AUD/USD slips beneath 0.7100 despite RBA’s Ellis signals more rate hikes, focus on Fed Minutes

• AUD/USD eases from intraday high, stays around three-week top.
• RBA’s Ellis highlights global supply chain disruptions, hints at further rate increases.
• Market sentiment dwindles amid second-tier geopolitical risks.
• Australia’s Q1 Construction Work Done, US Durable Goods Orders and risk catalysts may entertain traders ahead of FOMC Minutes.

AUD/USD retreats to 0.7100 as RBA’s Ellis raises housing market concerns during Wednesday’s Asian session. In doing so, the Aussie pair also takes clues from the recent geopolitical tensions surrounding North Korea and the US, as well as the cautious mood ahead of the latest Federal Open Market Committee (FOMC) Minutes.

RBA Assistant Governor (Economic) Luci Ellis said, "There will be more rate rises from here." The policymaker also mentioned that the housing industry is at capacity as supply lines snarl, per Reuters. The policymaker also said, “Australia's housing industry has a strong pipeline of new work but faces global supply disruptions and rising material costs which are delaying completions and squeezing margins”. 

Elsewhere, North Korea’s firing of three missiles and Japan’s dislike for the same join the market’s anxiety ahead of the today’s Fed Minutes seem to also weigh on the market’s optimism and probe the AUD/USD pair.

It’s worth noting that a pause in the US Treasury yields’ fall around the monthly low near 2.70% also seems to probe the AUD/USD buyers.

On Tuesday, downbeat prints of the US housing data and repeated Fedspeak, in contrast to the hawkish comments from the ECB, exerted downside pressure on the US Dollar. However, the Australian Dollar also couldn’t cheer the greenback’s weakness as May’s PMIs from the Pacific major also came in downbeat.

Amid these plays, the S&P 500 Futures rise half a percent after mixed closing on the Wall Street whereas the US 10-year Treasury yields dropped the most in a week to refresh a one-month low of around 2.717%.

Moving, Australia’s Q1 2022 Construction Work Done, expected 1.0% versus the prior 0.4%, may entertain AUD/USD traders but major attention will be given to the US Durable Goods Orders for April and FOMC minutes.

Read: FOMC May Minutes Preview: Will the Fed have to sell MBS?

Technical analysis

Unless staying beyond the 0.7035-40 support confluence, including the 21-DMA and previous resistance line from April 05, AUD/USD prices remain directed towards the monthly high of 0.7267.