AUD/USD: Bulls and bears jostle around mid 0.7300s ahead of RBA

• AUD/USD seesaws inside a 15-pip trading range, retreats from high of late.
• Market sentiment improves amid stimulus hopes but virus woes probe bulls amid pre-RBA cautious mood.
• RBA is likely to push back September tapering, revise down economic forecasts while keeping current policy unchanged.
• Positive surprise will have more strength to propel pair prices amid mildly optimistic markets, USD weakness.

AUD/USD refreshes intraday low to 0.7358, during early Tuesday. Even so, the Aussie pair prints a meager 0.05% daily loss as traders await monetary policy decisions from the Reserve Bank of Australia (RBA).

The quote’s latest weakness could be linked to the downbeat prints of Aussie housing numbers for June. Details suggest that Australia Building Permits dropped below -4.5% forecast to -6.7% MoM whereas the Home Loans slipped beneath +1.9% prior to -2.1%. Further, Investment Lending for Homes also weakened below 13.3% to 0.7% for the stated month.

Although the pair refreshed intraday low following the data, cautious sentiment ahead of the RBA limits the AUD/USD moves of late.

In addition to the pre-RBA caution, a mixed play between the Delta covid variant fears and stimulus headlines also contribute to the AUD/USD traders’ indecision.

New South Wales marks the second day of softer covid infections with the latest figures being 202, taking the national total down to 223. Even so, downbeat PMI numbers from the US and China, published the previous day, raise doubts over global economic recovery from the pandemic.

On the same line were comments from the US Centers for Disease Control and Prevention (CDC) terming Delta variant of the virus as “likely more severe” than earlier versions, per Reuters. Furthermore, the reintroduction of the local lockdowns in China and Aussie hardships due to the COVID-19 strain also amplifies the pessimism.

To fight back the same, the Aussie government offers local relief packages while the US Senators are hopeful of getting President Joe Biden’s over $1.0 trillion infrastructure spending plan through the house during this week. Recently, the International Monetary Fund (IMF) announced the historical allocation of $650 billion to its Special Drawing Rights (SDRs) to help combat the pandemic and infuse liquidity into the markets.

Against this backdrop, S&P 500 Futures print 0.18% intraday gain whereas the US 10-year Treasury yields add 1.5 basis points (bps) to 1.187%, following the lowest daily close since February, by the press time.

Moving on, AUD/USD traders will keep their eyes on the RBA decision as the Aussie central bank is widely anticipated to roll back the calls of cutting weekly bond purchase by $1.0 billion, also expected to revise down inflation and growth forecasts. However, any positive surprises will have a magnified impact considering the mildly positive market sentiment.

Technical analysis

AUD/USD remains short-term bearish below 0.7410-15 including early July lows and last week’s swing high while a trend change can only be expected on a daily closing beyond 200-DMA near 0.7600. Even so, 0.7340 support confluence, comprising weekly rising trend line and highs marked during September–November 2020 probe intraday sellers ahead of directing them to the yearly low of 0.7288.