AUD/USD floats near two-week high past 0.6700 as fears of banking collapse ease, RBA Minutes eyed

• AUD/USD seesaws around multi-day high as bulls take a breather after three-day winning streak.
• UBS-Credit Suisse deal, joint central bank efforts to tame liquidity crunch improve market’s mood.
• Yields remain depressed while Gold and equities improve, which in turn weigh on US Dollar.
• RBA’s Kent praised soundness of Aussie banks, defends rate hike bias.

AUD/USD portrays the market’s cautious optimism, as well as cheers the broad US Dollar weakness, as it seesaws near the highest levels in two weeks during early Tuesday morning in Canberra. That said, the Aussie pair makes rounds to 0.6715-20 after rising in the last three consecutive days.

The Aussie pair’s latest gains could be linked to the market’s easing fears of the banking sector collapse, as well as the cautious optimism showed by Christopher Kent, Reserve Bank of Australia’s (RBA) Assistant Governor (Financial Markets). Adding to the quote’s upside momentum could be the upbeat performance of Gold and softer Treasury bond yields, which in turn exerted downside pressure on the US Dollar.

That said, RBA’s Kent spoke a speech on "Long and Variable Monetary Policy Lags" at the KangaNews Debt Capital Market Summit, in Sydney, early Monday morning, while saying that the Australian banks are unquestionably strong. The policymaker also said that RBA is very conscious of the challenges facing borrowers from rapid rate rises.

Elsewhere, news of UBS’ takeover of the troubled Credit Suisse, by paying 3 billion Swiss francs (£2.6bn), also eased the market’s fears. On the same line were statements from the US Federal Deposit Insurance Corporation (FDIC) mentioning that the deposits of Signature Bridge Bank will be assumed by a subsidiary of New York Community Bancorporation.

Furthermore, around five major banks joined the US Federal Reserve (Fed) to ease the US Dollar liquidity crunch via currency swaps and added strength to the market’s risk-on mood. “The Bank of Canada, Bank of England, Bank of Japan, European Central Bank, Federal Reserve, and Swiss National Bank are all up for announcing joint actions to provide more liquidity via standing US dollar liquidity swap line arrangements,” said Reuters.

It should be noted, however, that a Senior Swiss lawmaker warned on Monday that “the UBS-Credit Suisse merger is an enormous risk,” which in turn probed the optimists amid the market’s anxiety ahead of this week’s top-tier data/events.

Against this backdrop, the US Dollar Index (DXY) dropped to the lowest levels in a month while the US Treasury bond yields stays pressured. Further, Wall Street closed on the positive side where Gold price refreshed Year-To-Date (YTD) high before retreating to $1,980 at the latest.

To sum up, the AUD/USD buyers are likely to keep the reins amid the firmer sentiment and the hawkish RBA talks. However, today’s RBA Monetary Policy Meeting Minutes will be crucial to watch as the bulls may want to reconfirm policymaker Kent’s hawkish bias. That said, the Aussie central bank announced a 0.25% rate hike in the last meeting and appeared a bit tense over the future rate increase.

Technical analysis

A clear upside break of the six-week-old descending resistance line, now immediate support around 0.6635, directs AUD/USD buyers towards the 100-DMA hurdle of near 0.6765.