• AUD/USD steadies around multi-day low, probes two-day losing streak.
• Hawkish Fed Minutes, fears emanating from China, Russia weigh on Aussie pair.
• Downbeat Australia data add strength to the bearish bias.
• Second readings of the US Q4 PCE, GDP will be important ahead of Fed’s preferred inflation gauge.

AUD/USD picks up bids to refresh intraday high around 0.6810 as bears take a breather around the 1.5-month low, after a two-day downtrend, during early Thursday. In doing so, the Aussie pair might have cheered the latest geopolitical hints from US President Joe Biden but the broad pessimism surrounding the Ukraine-Russia war and the Fed’s aggression keeps the Aussie bears hopeful.

That said, President Joe Biden said on Wednesday, in an interview with ABC News, that he did not read into Vladimir Putin's decision to temporarily suspend participation in a nuclear arms treaty as a signal the Russian President was considering using nuclear weapons. US President Biden, however, called it a "big mistake", reported Reuters.

Although the headlines ease the geopolitical fears by a bit, comments from China's top diplomat Wang Yi and Russian President Putin weigh on the sentiment and the risk-barometer AUD/USD pair. China’s Diplomat Wang Yi met Russian President Vladimir Putin and said that they are ready to deepen strategic cooperation with Russia on Wednesday, as reported by Reuters. The Chinese policymaker also added that their relations will not succumb to pressure from third countries. Meanwhile, Putin noted that it's very important for them to have a cooperation with China and said he is looking forward to Chinese President Xi Jinping visiting Moscow.

Elsewhere, hawkish Federal Reserve (Fed) Minutes and statements suggesting higher interest rates from the Fed also weigh on the AUD/USD. As per the latest Federal Open Market Committee’s (FOMC) Monetary Policy Meeting Minutes, all participants agreed more rate hikes are needed to achieve the inflation target while also favoring further Fed balance sheet reductions. Adding strength to the hawkish Fed Minutes were statements suggesting that a few participants favored a 50 basis point (bps) rate hike, while some believed there was an elevated risk of a recession in 2023.

On the same line, St. Louis Federal Reserve President James Bullard also mentioned that the Fed will have to go north of 5% to tame inflation, as reported by Reuters. The policymaker also stated that he believes there are good chances they could beat inflation this year without creating a recession. The same suggests higher Fed rates for longer and exerts downside pressure on the AUD/USD price. Additionally, Federal Reserve Bank of New York President John Williams also highlighted the hawkish Fed concerns and weighed on the AUD/USD as he said, “Fed is absolutely committed to getting inflation back to 2%.”

It should be noted that downbeat prints of Australia’s Wage Price Index for the fourth quarter (Q4) join softer Q4 Construction Work Done and unimpressive Westpac Leasing Index for January to weigh on the AUD/USD price.

Amid these plays, the US Dollar Index (DXY) stretched its previous run-up to refresh the multi-day high while the US 10-year and two-year Treasury bond yields retreat from their three-month high. Further, Wall Street closed mixed and should have put a floor under the AUD/USD.

Moving on, AUD/USD bears will be interested in seeing a strong print of the Personal Consumption Expenditures for the fourth quarter (Q4), as well as no disappointment from the second readings of the US Gross Domestic Product (GDP) for the said period.

Technical analysis

A daily closing below the three-month-old ascending trend line, now immediate resistance near 0.6820, needs validation from the 200-DMA support surrounding 0.6800 to convince the AUD/USD bears.