- Australia to release RBA minutes and consumer sentiment
- US debt crisis pushes US yields and the US dollar higher
- AUD/USD is putting pressure on resistance at 0.6699. This is followed by 0.6761
- 0.6579 and 0.6517 are providing support
AUD/USD has rebounded on Monday, after a steep slide of 2% over the previous two sessions. The Australian dollar is trading at 0.6689, up 0.71% on the day.
Markets await RBA minutes
RBA minutes are often on the dull side, but Tuesday’s release could be an exception. The minutes will provide details about the meeting earlier this month when the RBA surprised the markets with a 25-basis point hike. Investors had expected a second straight pause, but instead, the RBA zig-zagged. Governor Lowe had to explain why the pause was so short, blaming the strong labour market and concerns over services and energy price inflation.
The danger for the RBA in catching the markets off guard with a rate move is damage to credibility. The minutes should provide some insights into the Bank’s decision to hike and investors will also be looking for hints about what to expect in the future from the RBA.
Australia will also release consumer confidence for May. The markets are bracing for a decline of 1.7% after a stellar gain in April of 9.4%.
In the US, the debt ceiling crisis is looming, with a deadline of June 1st. Lawmakers will have to find a solution, but in the meantime, the Republicans and Democrats are playing a game of who blinks first. The uncertainty has sent US Treasury yields higher, which gave the US dollar a sharp boost late last week against most of the majors and sent the Aussie plunging by 2%.
In the US, it’s a fairly quiet start to the week. The highlight is the Empire State Manufacturing Index for May, which is projected to come in at -3.7, following a 10.8 reading in April. We’ll also hear from three Fed members.
