AUD/USD fails to cheer Bullock’s selection as RBA Governor, retreats from monthly high below 0.6900

• AUD/USD bulls take a breather at one-month high, prods three-day winning streak.
• Australian government announces Michele Bullock as the next RBA Governor.
• Bullock’s initial comments appear less promising and weigh on Aussie price together with hawkish statements from Fed’s Waller.
• Risk catalysts, US consumer sentiment data eyed for clear directions.

AUD/USD renews its intraday low near 0.6880 as it retreats from the highest level in a month after the Australian government announced Michele Bullock as the next Reserve Bank of Australia (RBA) Governor on early Friday. In doing so, the Aussie pair also prints the first daily loss in three while justifying hawkish comments from Federal Reserve Governor Christopher Waller.

Australian Prime Minister Anthony Albanese and Treasurer Jim Chalmers called an emergency press conference after media reports circulated that Philip Lowe won’t have a chance for reappointment as the RBA Governor after his term expires in September 2023. During the conference, the government officials notified that Bullock will be the first woman to lead the RBA from September 18, 2023.

It should be noted, however, that the first comments from the incoming RBA Leader weren’t impressive as she said that that is a challenging time for her role. The current Deputy Governor Bullock also stated that leading the RBA through change will be a big part of her role.

Apart from the RBA chatters, hawkish comments from Fed’s Waller also prod the AUD/USD bulls, especially amid a cautious mood ahead of the preliminary readings of July’s US Michigan Consumer Sentiment Index, as well as the Five-Year Consumer Inflation Expectations.

“Fed likely to need two more 25 basis point rate hikes this year,” said Fed’s Waller in the prepared remarks for delivery before a gathering held by The Money Marketeers of New York University shared by Reuters.

Previously, a slump in the US Consumer Price Index (CPI) probed the Federal Reserve (Fed) hawks and drowned the US Dollar, which in turn propelled the AUD/USD price to a multi-month high. On Thursday, US Producer Price Index (PPI) came in as 0.1% YoY for June, versus 0.4% expected and 0.9% prior while the PPI ex Food & Energy, also known as the Core PPI, eased to 2.4% YoY from 2.8% previous reading and 2.6% market forecasts. Earlier in the week, the US Consumer Price Index (CPI) registered a 3.0% YoY figure for June versus 3.1% market forecasts and 4.0% reported for May. Further details suggest that the CPI ex Food & Energy, also known as the Core CPI, softened to 4.8% yearly for the said month compared to analysts’ estimations of 5.0% and 5.3% previous readings.

It’s worth noting that upbeat China trade numbers and the mixed US-China updates were extra catalysts for the AUD/USD the previous day. That said, China’s trade surplus widened in both Chinese Yuan (CNY) and the US Dollar (USD) terms as the Imports dropped lesser than the Exports during June. It should be noted that China’s Commerce Minister called on the US to lift “unilateral” sanctions against them in a statement on Thursday. The Ministry also asked the US to immediately stop what it called the unreasonable suppression of Chinese enterprises, suggesting turbulence in the Sino-US ties.

Against this backdrop, the US Dollar Index (DXY) licks its wounds near 99.75 after dropping to the lowest level since April 2022 the previous day, down 2.45% in a week so far. That said, the United States Treasury bond yields also slumped to the lowest level in two weeks and underpinned Wall Street’s run-up, as well as fuelled the Gold price.

Looking forward, the market’s cautious mood ahead of the US data and the AUD/USD pair’s latest U-turn from the key resistance line may tease the sellers. Also important to watch will be the headlines surrounding China and the Fed.

Technical analysis

Overbought RSI conditions and a failure to cross the 15-month-old descending resistance line, around the 0.6900 mark by the press time, suggest a pullback in the AUD/USD price.