AUD/USD retreats towards 0.6900 despite upbeat Aussie PMI data, RBA Minutes eyed

• AUD/USD struggles to hold recovery from multi-day low after Australia activity data.
• Preliminary readings of S&P Global PMIs for Australia improved in February.
• US holidays, sluggish markets allowed buyers to keep the reins despite geopolitical challenges.
• RBA Minutes should justify hawkish bias to keep the buyers in driver’s seat, US PMIs will be important to watch afterward.

AUD/USD fades the week-start optimism even as Australian activity data for February came in firmer during early Tuesday. Adding strength to the pullback moves could be the return of the full markets, as well as the geopolitical fears. Furthermore, cautious mood ahead of the Reserve Bank of Australia’s (RBA) Monetary Policy Meeting Minutes also weakens the risk-barometer pair. That said, the Aussie pair retreats to 0.6910 at the latest, following the previous day’s run-up to 0.6920.

Australia’s preliminary readings of the S&P Global PMIs for February came in firmer as Manufacturing PMI rose to 50.1, versus 49.9 expected and 50.0 prior while the Services PMI increased to 49.2 from 48.6 previous readings and 48.4 market forecasts. Further, the S&P Global Composite PMI also improved to 49.2 from 48.5.

Even so, the AUD/USD pair failed to cheer the upbeat data and retreats to 0.6910 following the release.

The Aussie pair’s latest pullback could be linked to the return of the full markets as well as the latest challenges to the sentiment, especially emanating from geopolitical fears surrounding China, Russia and North Korea. On the same line could be the hopes of witnessing dovish remarks of the RBA policymakers from today’s RBA Monetary Policy Meeting Minutes.

On Monday, AUD/USD managed to remain firmer amid hopes of more stimulus from China, after the People’s Bank of China (PBOC) left its monetary policy unchanged. Also seemed to have helped the pair buyers could be the last round of Federal Reserve (Fed) talks that came in slightly off beat, not to forget the President’s Day holiday in the US.

Amid these plays, Wall Street was closed and US Treasury yields eased.

Technical analysis

A clear rebound from the 200-DMA, around 0.6800 by the press time, directs AUD/USD towards a 13-day-old resistance line, close to 0.6950 at the latest.