AUD/USD eyes RBA meeting minutes to counter US dollar strength

Tuesday’s Asia-Pacific outlook

Asia-Pacific stocks are looking at a mixed open today after a volatile overnight session in New York that saw major US indexes close lower. Trading volumes were lighter than normal coming back from the extended holiday weekend, which may have contributed to some of the volatility. The US dollar rose versus its major peers as traders sought safety. That pushed AUD/USD lower while USD/JPY hit its highest level since May 2002.

The Australian dollar may move on the Reserve Bank of Australia’s latest meeting minutes release due out at 01:30 GMT. Rate traders will be carefully parsing through today’s minutes, which may see hike forecasts shift. That could induce some strength or weakness in the Aussie dollar. Cash rate futures are currently pricing in the first hike at the June RBA meeting.

However, even a relatively more hawkish than expected report from the RBA may not be enough to lift AUD/USD. The US dollar is not only gaining from overnight equity volatility, but also rising geopolitical tensions amid a new Russian offensive in Eastern Ukraine. Moreover, political instability has flamed up in Israel. A rocket fired from the Gaza Strip, on Monday, was shot down by the Israeli military, ending months of peace. The attack could be the start of another round of conflict, but it also threatens Prime Minister Naftali Bennett’s government.

Brent crude oil prices rose after Libya’s El Feel oil field halted production. The oil field produces around 70,000 barrels of oil per day, according to officials from Libya’s National Oil Corporation (NOC). NOC said the shutdown is part of a larger suspension of operations as politically motivated groups protest against the current administration in Tripoli.

Gold prices rose to almost touch the 2,000 mark but trimmed strength early this morning, with prices nearly unchanged over the past 24 hours. US natural gas prices surged as energy traders bid prices higher as inventory levels stagnate at a time when they historically rise. Later today, Japan will see a final read on industrial production for February. Indonesia’s central bank is also scheduled to announce a rate decision. This morning, New Zealand’s performance of services index (PSI) rose to 51.6 for March, according to the Bank of New Zealand.

AUD/USD technical forecast

AUD/USD fell to its 61.8% Fibonacci retracement level and the 50-day Simple Moving Average (SMA) is directly below offering potential support. However, a drop lower would open the door for prices to fall to the 78.6% Fib and 100-day SMA. The momentum oscillators are weakening, with MACD on track to cross below its centerline. For now, the path of least resistance looks to be lower.

AUD/USD daily chart

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