AUD/USD: A Touch Shy Of Friday’s YtD Highs

A flat start for AUD/USD, after the greenback failed to capitalise on the latest shift higher in U.S. Tsy yields on Friday, while weekend news centring on China’s Shanghai entering a two-day lockdown, the White House quickly going into damage limitation after President Biden made some mistakes in his latest comments re: Russian counterpart Putin (initially indicating that Russian regime change could be on the radar for the U.S.) and a 3-day Houthi ceasefire re: Saudi Arabia (which has weighed on crude oil prices) hasn’t impacted the rate. AUD/USD trades 5 pips lower on the day as a result, last printing $0.7510.

• Domestically, the weekend has seen Australian Treasurer Frydenberg point towards a reduction in petrol prices ahead of the release of the Budget (on Tuesday). Subsequently, the AFR noted that “a reduction of the fuel excise for at least six months and an A$18bn addition to the government’s A$110bn infrastructure plans will feature in Tuesday’s pre-election federal budget.”
• A quick reminder that Australia’s terms of trade situation has been supported by the run higher in commodity prices observed in recent weeks/months (with the Russia-Ukraine conflict providing the main point of intensification on that front). Elsewhere, market pricing surrounding the RBA remains extremely hawkish (~170bp of tightening is priced for ’22), which could provide headwinds for the AUD in the coming months, if the RBA sticks to its current stance/view and delivers a less hawkish outcome than what is priced.• From a technical perspective, Friday’s fresh YtD high ($0.7537), provides the main point of nearby technical resistance. Above there, bulls would switch focus to key resistance in the form of the Oct 28 ’21 high ($0.7556). Meanwhile, initial support can be found at the Mar 23 low ($0.7450).
• The Asia-Pac docket is pretty empty on Monday, so it will be a case of news digestions /headline watching until London trade gets underway.