AUD/USD shifts below 0.6700 as RBA minutes remain less hawkish, Fed policy hogs limelight

• AUD/USD may display further downside as investors believe that RBA’s response to Australian stubborn inflation is ordinary.
• RBA policymakers are worried that monthly Consumer Price Index (CPI) could remain volatile from month to month.
• To contain the consequences of elevating banking stress, Fed could consider silence on interest rates.

The AUD/USD pair is displaying a back-and-forth action below the round-level resistance of 0.6700 in the early Asian session. The Aussie asset still looks vulnerable below 0.6700 and is expected to continue its downside as the release of the Reserve Bank of Australia (RBA) minutes have confirmed that RBA policymakers are not very hawkish as expected by the street.

In considering the policy decision, members observed that inflation in Australia remained too high, the labor market was very tight and wage growth had picked up. Surveys continued to signal that business conditions were favorable. Also, RBA policymakers considered the option of 25 basis points (bps) only despite persistent inflation in the Australian economy.

For inflation guidance, the minutes show that RBA policymakers are worried that the monthly Consumer Price Index (CPI) could remain volatile from month to month despite softening from its peak of 8.4%, recorded in December.

Meanwhile, S&P500 futures are sticking to some nominal losses, which have been added in the Asian session. The 500-US stocks basket recovered firmly on Monday as the street is anticipating an unchanged monetary policy from the Federal Reserve (Fed). To contain the consequences of elevating banking stress, Fed chair Jerome Powell could consider silence on interest rates as further policy tightening could propel fears of further banking turmoil.

The US Dollar Index (DXY) is struggling to extend its recovery move above 103.44 as the street believes in the hawkish case scenario, Fed won’t go beyond the 25 basis points (bps) rate hike as the revival of investors’ confidence has also become a priority for them.