AUD/USD drops toward 0.6760 support as RBA clues fail to impress bulls but PBoC, Fed signals lure bears

• AUD/USD prints the biggest daily loss in a month, down for the third consecutive day as it prods intraday low.
• RBA Minutes defend the latest hawkish rate surprise but fails to provide clues for further increase rate increase.
• RBA’s Bullock cites short-term negatives for Aussie employment, economy.
• PBoC’s rate cut, hawkish Fed bets and dicey markets also weigh on the risk-barometer pair.

AUD/USD bears occupy the driver’s seat around the 0.6800 round figure amid early Tuesday morning in Europe. With this, the Aussie pair not only bears the burden of the Reserve Bank of Australia’s (RBA) unimpressive Minutes but also the downbeat updates from the People’s Bank of China (PBoC), as well as hawkish concerns about the US Federal Reserve. It should be noted that the market’s cautious mood and a light calendar also favor the risk-barometer pair to print the biggest daily loss in a month, so far.

RBA Minutes defend the consecutive second hawkish surprise by terming it a trick to boost confidence that inflation will return to normal sooner. Even so, failure to provide hints for further rate hikes weighs on the AUD/USD price.

On the same line, RBA Deputy Governor Michele Bullock also said that the higher rates are the only tool the RBA has to curb inflation. The policymaker, however, also said that the employment and economy need to grow below trend for a while.

Earlier in the day, the People's Bank of China (PBoC) cuts its benchmark Loan Prime Rates (LPRs) by 10 basis points (bps), matching market expectations. That said, the one-year LPR was reduced from 3.65% to 3.55% while the five-year LPR currently stands at 4.20% from 4.30% previous readings.

With the rate cuts, the PBoC backs the market’s fears of China’s slower economic recovery and the downward growth forecasts from the top-tier banks, including Goldman Sachs and JP Morgan.

As a result, the AUD/USD had extra reasons to fall the most in a month while printing a three-day losing streak.

It should be noted that the monetary policy officials from the European Central Bank (ECB) and the US Federal Reserve (Fed) have been hawkish so far and hence flag fears of the global economic slowdown, which in turn weigh on the sentiment and the AUD/USD price.

While portraying the mood, S&P500 Futures print mild losses whereas the yields grind higher.

Moving on, the return of the full markets will keep entertaining the AUD/USD bears amid hawkish Fed hopes and the risk-off mood. However, major attention will be given to Wednesday’s Fed Chair Jerome Powell’s bi-annual Testimony for clear directions.

Technical analysis

A clear downside break of an ascending support line from May 31, now immediate resistance near 0.6885, directs the AUD/USD bears toward the 200-day Exponential Moving Average (EMA) support of around 0.6760.