AUD/USD dribbles at six-week low, 0.7250 in focus ahead of RBA’s Ellis

• AUD/USD fails to cheer USD pullback, stays pressured around six-week low.
• RBA’s rejection of rate hike precedes subdued Q3 Australian wage growth data to back the bears.
• Fed tapering concerns remain elevated but US Treasury yields retreat amid a lack of major data/events.
• RBA’s Ellis will be eyed to confirm the bearish bias ahead of US second-tier data.

AUD/USD grinds lower around the six-week bottom, taking rounds to 0.7265 during Thursday’s initial Asian session. In doing so, the Aussie pair drops for the third consecutive day amid sour sentiment and receding odds of the Reserve Bank of Australia’s (RBA) rate hike.

Although the US Dollar Index (DXY) track Treasury yields in stepping back from the multi-day high, the AUD/USD prices remain pressured and dropped to the lowest levels since early October as the Aussie wage price data backed RBA’s rejection of rate lift the previous day.

That said, Australia Wage Price Index matches the 2.2% YoY forecast and crossed 0.5% QoQ market consensus for the Q3. Earlier in the week, the RBA Minutes and Governor Philip Lowe both pushed back rate hike concerns.

It’s worth noting that an absence of any major positive news from the virtual meeting between US President Joe Biden and his Chinese counterpart Xi Jinping adds to the bearish bias for the AUD/USD. Additionally, the hawkish Fedspeak keeps the US central bank (Fed) on top of its counterparts while watching for a rate hike, which in turn exert downside pressure on the Aussie prices. Recently, Charles L. Evans, the Chief Executive Officer of the Federal Reserve Bank of Chicago said, “It will take until the middle of next year to complete the Fed's wind-down of its bond-buying program, even as the central bank remains 'mindful' of inflation.”

Alternatively, the US efforts to increase oil supply and the White House comments suggesting receding supply chain issues join mixed housing data from the US to offer breathing space to the AUD/USD sellers.

Amid these plays, US 10-year Treasury yields retreat from the highest levels since October 26 to post the heaviest daily fall in a week while ending Wednesday’s US trading session around 1.59%, down 4.3 basis points (bps). DXY tracks bond yields and marks a first negative daily closing in three after refreshing the 16-month top during early Wednesday. It’s worth noting that the Wall Street benchmarks remained negative for the second consecutive day.

Looking forward, RBA Assistant Governor (Economic) Luci Ellis is up for a speech at an online event hosted by the Committee for Economic Development of Australia around 02:00 GMT. His comments will be watched to confirm the latest bearish impulse for the AUD/USD. Following that, the US Jobless Claims and Fedspeak will be eyed for clearer direction.

Technical analysis

A 12-day-old resistance line precedes convergence of the 100-DMA and the 50-DMA, respectively around 0.7310 and 0.7360-65, to restrict the short-term upside of the AUD/USD prices. Also keeping the pair sellers hopeful is the latest downside break of the 61.8% Fibonacci retracement (Fibo.) of August-October uptrend, around 0.7275. it should be noted, however, that an ascending support line from August near 0.7250, challenges further downside amid oversold RSI conditions.