AUD/USD prods pullback from five-week high near 0.6750, RBA’s Lowe, US data eyed

• AUD/USD licks its wounds after posting RBA-induces losses near five-week high.
• RBA paused rate hike trajectory and called the Aussie bears, RBA Statement defends hawks.
• Softer US data, positive sentiment and challenges to US Dollar’s reserve currency status drown US Dollar.
• RBA’s Lowe need to defend hawkish Statement to recall Aussie pair buyers, US data important too.

AUD/USD bears take a breather around mid-0.6700s during early Wednesday as traders await Reserve Bank of Australia (RBA) Governor Philip Lowe’s speech after the Aussie central bank paused the rate hike trajectory and pleased sellers the previous day.

After 10 consecutive rate increases, the RBA announced the status quo of its current monetary policy with the benchmark rate being 3.60% at the latest. In doing so, the Australian central bank justifies the recent downside of Australian inflation and Retail Sales data while also saying, “Board expects that some further tightening of monetary policy may well be needed.”

Risk-on mood joins news suggesting recent challenges to the US Dollar’s reserve currency status appear to weigh on the greenback.

Bloomberg released a news report suggesting the US Dolllar’s less acceptance as a reserve currency in Russia while highlighting the greenback’s latest weakness. “Chinese Yuan has surpassed the US Dollar as the most traded currency, in monthly trading volume, for the first time in Russia in February,” said the news while also adding that the gap has continued to widen in March.

In the last week, Brazil and China agreed to pause the US Dollar’s usage as an intermediary in trade transactions.

Alternatively, Russian Foreign Minister Sergei Lavrov raised fears of escalating Moscow-Brussels tussle by saying, “The European Union (EU) has "lost" Russia.” The policymaker also added that Moscow will deal with Europe in a tough fashion if need be. The US-China tension is also on the spoke as Beijing keeps reiterating its dislike for the US-Taiwan ties but Washington seems to ignore it. China’s Consulate General in Los Angeles spokesperson criticized a meeting between Taiwan President Tsai Ing-wen and US House Speaker Kevin McCarthy on early Tuesday.

Talking about the data, US Factory Orders for February came in -0.7% MoM versus -0.5% expected and downwardly revised -2.1% prior. Further, the US JOLTS Job Openings dropped to the lowest levels since May 2021 while flashing 9.931M figure for February versus 10.4M expected and 10.563M revised prior.

Amid these plays, Wall Street closed in the red while the yields are down amid softer US data.

Moving on, RBA Governor Lowe’s speech will be crucial for the AUD/USD pair traders to watch as traders will look for clues of how the policymakers may renew the rate hike trajectory, which in turn can propel the Aussie price.

On the other hand, US ISM Services PMI for March and ADP Employment Change for the said month will be important for any sign of recovery of the US Dollar.

Also read: US ADP Jobs/ISM Service PMI Preview: Slowing but still positive

Technical analysis

Despite the latest pullback, the AUD/USD prices remain beyond the 200-DMA support of 0.6745, which in turn suggests the recovery towards a convergence of the 100-DMA and 50-DMA surrounding 0.6805.