• AUD/USD takes offers to refresh intraday low even as RBA announced 0.50% interest rate increase.
• Hopes of US-China trade deal join downbeat Treasury yields to portray cautious optimism.
• US dollar begins trading week on a back foot with eyes on Factory Order for June.
• Fed Minutes, US NFP appear as the week’s key events.

AUD/USD fails to cheer the Reserve Bank of Australia’s (RBA) interest rate hike as it drops nearly 30 pips towards 0.6850 after the announcement. The reason could be linked to the mostly priced-in news impacts.

That said, the quote’s latest weakness could also be linked to the RBA statement saying, “In Australia, inflation is high, but not as high as in many other countries.”

Elsewhere, comments from Chinese Vice Premier Liu He suggests an improvement in the US-China trade ties, at least for now, which in turn favored the market sentiment previously. “The two agreed to need to strengthen communication & coordination of macroeconomic policies between China and the US,” said the macro update conveying telephonic talks between China’s Liu He and US Treasury Secretary Janet Yellen.

Additionally, expectations surrounding Aussie-China Foreign Ministers’ meeting in Indonesia and upbeat China Caixin Services PMI also favored the AUD/USD prices before the RBA.

China’s Caixin Services PMI for June rallied past market consensus and previous readouts as it flashed 54.5 figure, compared to 47.3 forecasts and 41.4 prior.

While portraying the market’s mood, the US 10-year Treasury yields approach 3.0% level up 1.70% intraday by the press time, whereas the S&P 500 Futures rise 0.40% by extending the previous two-day upside near 3,850.

To sum up, AUD/USD traders appear unimpressed by the RBA’s 0.50% rate hike as it was widely expected. Hence, the intraday moves seek clues from the US Factory Orders for May, expected 0.5% versus 0.3%, ahead of Federal Open Market Committee (FOMC) Minutes and the US Jobs report for June.

Technical analysis

A pullback from the key hurdle surrounding 0.6900, comprising the 10-DMA and the 13-day-old descending trend line, challenge AUD/USD buyers.

On the contrary, a downward sloping support line from late January, near 0.6755 by the press time, could restrict short-term declines of the AUD/USD pair, even if it fails to keep the latest run-up beyond the 0.6900 resistance-turned-support.