• AUD/USD is scaling higher and may find a hurdle around 0.6800.
• The minutes from Fed’s Beige Book have halted the DXY’s rally.
• RBA’s hawkish stance on OCR and Australian mixed GDP numbers supported antipodean.

The AUD/USD pair has turned sideways after a sheer upside move and will continue marching towards the immediate hurdle of 0.6800. The asset is oscillating in a 0.6766-0.6770 range and an upside break of the same will resume the upside journey. On Wednesday, the major rebounded firmly after defending the critical support of 0.6700 as the release of the Federal Reserve (Fed) Beige Book that dictates a qualitative review of economic conditions in the US weakened the US dollar index (DXY).

Fed’s Beige Book trims DXY’s appeal

The catalyst which dragged the DXY below the psychological support of $110.00 was a shift in the consumption pattern of the households. As price pressures have remained a hardship for households, households dropped shopping for durable goods and stocked necessity goods seldom. A drop in retail demand for durable goods displays a decline in consumer confidence as demand for essentials cannot be postponed. Apart from that, inflation pressures are displaying exhaustion signals.

More hawkish commentary came from Fed Vice Chair Lael Brainard citing that the central bank will continue its restrictive approach till it records a decline in the inflation rate for several months. The Fed needs to be confident that the desired rate of 2% will be accomplished before trimming the hawkish tone.

Mixed GDP and hawkish RBA supported Aussie

On the Aussie front, mixed Gross Domestic Product (GDP) data and a rate hike announcement by the Reserve Bank of Australia (RBA) have strengthened the antipodean. The Australian GDP data landed at 0.9%, lower than the expectations of 1% but above the prior release of 0.8% on a quarterly basis. However, the annual data has improved to 3.6% against the estimates and the prior print of 3.5% and 3.3% respectively. Also, RBA Governor Philip Lowe announced a fourth consecutive 50 basis points (bps) interest rate hike.

Going forward, investors will focus on the speech from Fed chair Jerome Powell and RBA Governor Philip Lowe. Fed Powell is expected to dictate the likely monetary policy action this month while RBA Lowe will discuss the rationale behind steeping up the Official Cash Rate (OCR) by 50 bps consecutively for the fourth time.