AUD/USD maintains its offered tone below 0.6500, looks to FOMC minutes for fresh impetus

• AUD/USD dropped to a fresh multi-month trough after Trump’s tariff threats on Tuesday.
• Bets for slower Fed rate cuts lift the US bond yields and the USD and also exert pressure. 
• Bears take a brief pause for a breather and look to FOMC minutes before placing fresh bets.

The AUD/USD pair struggles to capitalize on its intraday bounce from the 0.6435-0.6430 area, or its lowest level since August 5 touched earlier this Tuesday and keeps the red through the first half of the European session. Spot prices currently trade around the 0.6480 region, down for the second straight day, and seem vulnerable amid renewed US-China trade war fears.

US President-elect Donald Trump threatened to impose a 25% tariff on all products coming into the US from Mexico and Canada and an additional 10% tariff on all Chinese imports. This, in turn, tempers investors' appetite for riskier assets and turns out to be a key factor undermining the China-proxy Australian Dollar (AUD), which, so far, has failed to benefit from the Reserve Bank of Australia's (RBA) hawkish stance. Apart from this, the emergence of some US Dollar (USD) buying adds credence to the near-term negative outlook for the AUD/USD pair. 

Scott Bessent's nomination as the US Treasury secretary did provide a temporary respite to US bond investors amid concerns that Trump's expansionary policies will reignite inflation and force the Federal Reserve (Fed) to cut interest rates slowly. This, in turn, triggers a fresh leg up in the US Treasury bond yields and assists the USD to attract fresh buyers following the overnight slide. Furthermore, geopolitical risks should offer support to the safe-haven Greenback and support prospects for a further depreciating move for the AUD/USD pair. 

Traders, however, seem reluctant to place aggressive bets and opt to wait for the FOMC meeting minutes for cues about the future rate-cut path. Apart from this, Tuesday's economic docket also features the release of the Conference Board's Consumer Confidence Index, New Home Sales data and the Richmond Manufacturing Index. The data might influence the USD and provide some impetus to the AUD/USD pair. The focus will then shift to the Australian consumer inflation figures, due for release during the Asian session on Wednesday.