AUD/USD: Bulls face rejection near 0.6450 after pre-RBA bargain hunting

• AUD/USD firms up at the start of the week, with all eyes on Tuesday’s RBA.
• US dollar is finding fresh demand as Asia’s factory activity weakens.
• Further upside appears capped in the aussie amid risk-aversion.

AUD/USD is paring back gains towards 0.6400, having met fresh supply on a rejection near the 0.6450 psychological level. Bears are fighting back control, as the US dollar recovery is ganing traction amid strengthening risk-off flows in the late Asian session.

The aussie is adding 0.50% on the day, at the time of writing, underpinned by a short-covering rally. Investors resort to repositioning ahead of Tuesday’s RBA policy decision. The Australian central bank is widely expected to hike rates by 50 bps but a dovih surprise of 25 bps cannot be ruled out, as recession fears mount.

Despite the renewed upside, bulls have pulled back slightly over the last hours, as Asia’s factory activity weakens due to global slowdown and surging cost pressures, leaving investors on the edge. Further, falling commodities prices also add to the weight on the resource-linked aussie. Markets also remain cautious amid aggressive Fed tightening bets and ahead of the US payrolls data due for release this Friday.

more to come ...