AUD/USD eases towards 0.6600 with eyes on RBA Interest Rate Decision

• AUD/USD fails to extend week-start gains, remains pressured of late.
• First Republic Bank linked improvement in market sentiment, mixed Aussie PMI allowed buyers to prepare for RBA.
• US Dollar remains firmer despite unimpressive data, cheers upbeat yields, immediate solution to banking fallout.
• RBA is expected to keep the benchmark rates unchanged, future guidance is the key.

AUD/USD remains pressured near 0.6630-25 during the early hours of Tuesday’s Asian session, after paring the daily gains amid late Monday. In doing so, the Aussie pair portrays the trader’s anxiety ahead of the Reserve Bank of Australia’s (RBA) monetary policy decision.

The Aussie pair began the week on a firmer footing despite mixed data at home and in China. However, hopes of overcoming immediate challenges to the market sentiment from the First Republic Bank (FRB), which was finally dealt with, helped the risk barometer pair to remain firmer.

On Sunday, China’s official NBS Manufacturing PMI disappointed markets with 49.2 figures for April, versus 51.4 market forecasts and 51.9 prior readings. It’s worth noting that the Non-Manufacturing PMI rose past 50.4 expected figures to 56.4 but remained below 58.4 reported in March. With the downbeat numbers from Australia’s biggest customer, as well as the banking fears, the AUD/USD pair remains pressured of late.

At home, Australia’s S&P Global Manufacturing PMI for April eased to 48.1 versus 48.0 prior while TD Securities Inflation eased to 0.2% on MoM for the said month from 0.3% but improved to 6.1% YoY from 5.7% previous.

Elsewhere, the US regulators seized assets of the FRB and sold them to the new buyer, namely JP Morgan. “JPMorgan will pay $10.6 billion to the U.S. Federal Deposit Insurance Corp (FDIC) as part of the deal to take control of most of the San Francisco-based bank's assets and get access to First Republic's coveted wealthy client base,” said Reuters.

On the other hand, US ISM Manufacturing PMI improved to 47.1 for April versus 46.3 prior and 46.6 market forecasts while the S&P Global Manufacturing PMI for the said month eased to 50.2 versus 50.4 first estimations.

It should be noted that Friday’s upbeat US inflation clues via Core PCE Price Index joined the solution on First Republic Bank to underpin the market’s optimism. The same helped the Wall Street and AUD/USD prices. Further, the US Treasury bond yields also began the key week on a positive footing and allowed the US Dollar to extend the previous gains.

Looking forward, all eyes are on the Reserve Bank of Australia’s (RBA) Interest Rate Decision even as the market players expect no change in the benchmark interest rate or other monetary policy measures. The reason could be linked to the doubts over the Aussie central bank’s interest rate peak, which some in the market expected around 3.65%, versus the 3.60% level at the latest. Hence, the rate guidance and economic forecasts will be crucial to watch for AUD/USD traders in today’s RBA announcements.

Also read: Reserve Bank of Australia Preview: No change, nothing new for the Aussie

Technical analysis

A three-week-old descending resistance line, around 0.6655 by the press time, joins bearish MACD signals to restrict short-term AUD/USD upside.