AUD/USD retreats towards 0.6700 amid jittery markets, Australia NAB Sentiment, RBA’s Lowe eyed

• AUD/USD fades late Wednesday’s corrective bounce amid mixed markets.
• Fears of higher inflation in major economies leading to more rate hikes and recession weigh on sentiment.
• Geopolitical woes, mixed headlines from China also contributed to Aussie pair’s volatile moves.
• NAB’s quarterly Business Confidence will be crucial for clear directions, RBA’s Lowe eyed too.

AUD/USD eases back towards 0.6700, around 0.6715 by the press time, as cautious markets weigh on the risk barometer pair ahead of the top-tier data/events on Thursday.  That said, the mostly downbeat sentiment and firmer US Treasury bond yields weighed on the Aussie pair the previous day amid fears of inflation and geopolitical tensions.

A notable jump in the inflation numbers at the key global economies joined the hawkish comments from the top-tier central bank officials renewed fears of higher rates and recession, which in turn renewed the US Dollar’s haven demand on Wednesday. Adding strength to the risk aversion could be the war fears emanating from China and Russia. However, upbeat headlines from the Dragon Nation and an absence of any impressive US data tamed the AUD/USD pair’s run-up afterward.

Recently, the UK, Eurozone and the US have all been flashing upbeat signals for inflation while the central bank officials from the Bank of England (BoE), European Central Bank (ECB) and the Federal Reserve (Fed) are all favoring higher rates for longer. The same raises the fears of economic slowdown especially when the ex-inflation numbers haven’t been too impressive and the Russia-Ukraine war takes a toll on the global economy.

On the same line could be the Reuters’ news suggesting that US consumers are starting to fall behind on their credit card and loan payments as the economy softens.

St. Louis Federal Reserve President James Bullard, Richmond Fed President Thomas Barkin and Atlanta Fed President Raphael W. Bostic were the latest hawkish Fed speakers who rekindled the “higher for longer” scenario for rates and favored the US Dollar, as well as yields.

Talking about geopolitics, UK’s warned Russian hackers targeting Western critical infrastructure while the US House China Committee discussed the Taiwan invasion scenario. Furthermore, the likely drag on the US debt ceiling decision is due to US President Joe Biden’s hesitance in lifting debt limits. Additionally, Bloomberg released news suggesting China’s role in the Russia-Ukraine war, which in turn adds strength to the risk-off mood.

On the contrary, China’s National Development and Reform Commission (NDRC), the state planner, said on Wednesday, the country is formulating plans to boost the recovery and expansion of consumption.

Amid these plays, Wall Street closed mixed but the top-tier US Treasury bond yields refreshed monthly high and allowed the US Dollar to remain firmer.

Moving on, National Australia Bank’s (NAB) Business Confidence for the first quarter (Q1), expected 2 versus -1 expected, will precede Reserve Bank of Australia (RBA) Governor Philip Lowe’s independent review of the central bank to guide intraday moves of the AUD/USD pair. Above all, risk catalysts are the key.

Technical analysis

Repeated failures to break the 21-DMA support joins steady RSI (14) line to keep AUD/USD buyers hopeful.