AUD/USD portrays pre-Fed anxiety around 0.6400 ahead of US ADP Employment Change

• AUD/USD remains sidelined around short-term key supports amid sluggish markets.
• Indecision over Fed’s move in December restricts the Aussie pair’s immediate moves.
• Hopes of easy covid restrictions in China and the already-priced 75 bps rate hike from Fed favor bulls.
• Australia Building Permits, US ADP Employment Change are extra catalysts to watch for clear directions.

AUD/USD treads water around 0.6400 as traders turn cautious ahead of the key Federal Open Market Committee (FOMC) meeting on early Wednesday. In addition to the pre-Fed anxiety, the mixed concerns surrounding China and the US also challenge the Aussie pair traders amid a sluggish Asian session.

That said, the recent positive US data increased hopes of a hawkish Fed move and challenged the market’s previous notion that the policymakers will signal slower rate lifts from December. However, the growing fears of recession and higher price pressure seem to challenge the Fed hawks and the AUD/USD bears too.

That said, the US JOLTS Job Openings increased to 10.717M in September versus 10.0M forecast and upwardly revised 10.28M previous readings. Further, US ISM Manufacturing PMI increased to 50.2 in October versus 50.0 market forecasts and 50.9 prior. On the same line, final readings of the US S&P Global Manufacturing PMI for October rose past 49.9 initial forecasts to 50.4 but stayed below 52.0 readings for the previous month.

On the other hand, the Reserve Bank of Australia’s (RBA) readiness to offer more rate hikes, despite announcing the second 25 basis points (bps) of a lift to the benchmark rate the previous day, favor the AUD/USD buyers. “Rates have been increased by a large amount in a very short period of time,” Reserve Bank of Australia (RBA) Governor Philip Lowe said in his scheduled appearance on Tuesday. The policymaker also added that the board has judged it appropriate to raise rates at a slower pace.

Elsewhere, hopes of easing covid restrictions in China and recently firmer China Caixin Manufacturing PMI for October, despite posting the third print below 50.00, might have previously helped the AUD/USD buyers.

While portraying the mood, the yields remain inactive around 4.05%, following an upbeat start to November, whereas the S&P 500 Futures print mild gains even as Wall Street closed in the red.

That said, the AUD/USD pair traders should watch the risk catalysts and Australia’s Building Permits for September for fresh impulse amid the lackluster markets. Also important will be the October month US ADP Employment Change, as it is an early signal to Friday’s US Nonfarm Payrolls. However, major attention should be given to how well the Fed policymakers could convey a brake to the aggressive rate hikes.

Technical analysis

Tuesday’s daily candle joins the AUD/USD pair’s refrain from declining below the 10-DMA support near .6390 to keep buyers hopeful. However, a downward-sloping resistance line from early August, close to 0.6480 by the press time, challenges the quote’s upside momentum.