AUDUSD struggles to defend corrective bounce amid RBA’s status quo, market consolidation

“Turnaround Tuesday” plays its role during the Asia-Pacific trading session as market players reassess catalysts that triggered heavy sell-off in many riskier assets the previous day. Apart from that, a lack of major risk-negative headlines from the Middle East, China and the US also allow traders to lick their wounds.

As a result, the US Dollar Index (DXY) portrays a corrective bounce from a seven-month low and tests the previous run-ups of the Euro and Japanese Yen (JPY). It’s worth noting that the GBPUSD stays indecisive as the UK catalysts appear mixed while the AUDUSD fails to justify risk-barometer status due to the Reserve Bank of Australia’s (RBA) uneventful monetary policy meeting announcements.

Further, NZDUSD and USDCAD stay pressured while Crude Oil remains indecisive after bouncing off the lowest level since February earlier in the day. Moving on, Gold Price lacks direction while fading the initial recovery from a week’s low, testing a three-day losing streak by the press time.

BTCUSD and ETHUSD also recovered from the lowest levels since February and January in that order as crypto traders rechecked earlier catalysts challenging the market’s optimism. Apart from that, the US political signals, news from the spot ETFs and the US SEC’s mixed moves also allowed Bitcoin and Ethereum to lick their wounds.

Following are the latest moves of the key assets:

• WTI Crude oil remains indecisive around $73.80 while struggling to defend the previous day’s bounce off a six-month low.
• Gold stays on the back foot at around $2,395 after declining in the last three consecutive days.
• The USD Index bounces off a seven-month low to 103.00, challenging the two-day losing streak at the latest.
• Wall Street closed in the red but the Asia-Pacific shares print corrective bounce. Further, equities in Britain and Europe also pare the previous day’s losses during the initial trading hour.
• BTCUSD and ETHUSD both rise more than 3.0% intraday to around $55,900 and $2,520 at the latest.

US Dollar posts corrective bounce on Fed, soft landing concerns…

Be it the fears of global growth and uncertainty about the major central banks’ next moves or the skepticism surrounding the technological advancements, not to forget the geopolitical headlines, the markets had it all to tumble in the last two days. However, a reassessment of the lead catalysts, which included mostly upbeat US data and statements from the Federal Reserve (Fed) policymakers, allowed the risk complex to stabilize.

On Monday, the US ISM Services PMI for July marked better-than-forecast figures and pushed back previous pessimism surrounding the US economic transitions, as well as the Fed’s indecision. Apart from that, optimistic comments from Federal Reserve Bank of San Francisco President Mary Daly and Chicago Fed Governor Alan Goolsbee also allowed the risk appetite to improve and help the US Dollar to pare previous losses.

While the US Dollar pares previous losses, the EURUSD retreats from the highest level since early January 2024. That said, Eurozone Sentix Investor Confidence deteriorated but the Producers Price Index (PPI) improved.

Further, mixed prints of the UK Retail Sales clues and British Chancellor Reeves’ failures to convince markets of the nation’s economic soundness weigh on the GBPUSD prices.

USDJPY posts a stellar move as it initially dropped to a multi-month low before reversing half of the fall amid headlines suggesting optimism about Japan from Chief Cabinet Secretary Hayashi and Finance Minister Suzuki.

Moving on, AUDUSD licks its wounds after falling to the lowest level since November 2023 as the Reserve Bank of Australia (RBA) Governor sounds hawkish while keeping the monetary policy unchanged. It’s worth noting, however, that the fears surrounding China and the broad indecision among the traders challenge buyers of the Dollars in Australia, New Zealand, and Canada.

Crude Oil awaits more headlines from the Middle East and the US weekly Oil inventory numbers as it seesaws below $74.00 after posting a corrective bounce off the six-month low late Monday.

Gold price holds lower grounds despite a shift in the market’s mood as the firmer US Dollar weighs on the precious metal. It should be noted that the bullion prices dropped in the last three consecutive days despite being a traditional asset.

• Strong buy: USDCAD, USDJPY, US Dollar, Silver
• Strong sell: AUDUSD, NZDUSD, GBPUSD
• Buy: BTCUSD, ETHUSD, Nasdaq, Gold, DJI30, USDCNH
• Sell: DAX, FTSE 100, EURUSD, Crude Oil

Nothing major to watch ahead…

Having witnessed the market’s reaction to the US data/event and the RBA’s status quo, the economic calendar appears mostly light during the rest of Tuesday. Even so, the monthly readings of the Eurozone Retail Sales and the weekly prints of the American Petroleum Institute’s (API) crude oil inventory data might entertain the intraday traders. Above all, the risk headlines and momentum of bond and equity markets will be crucial for near-term directions, especially amid a lack of major catalysts this week. That said, the US Dollar might defend the latest rebound and can keep riskier assets like Antipodeans and commodities under pressure. The USDJPY and USDCHF, however, may give a tough fight to the greenback’s corrective bounce.

May the trading luck be with you!