AUD/USD FINDS INTERMEDIATE CUSHION NEAR 0.6660, US PMI AND RBA POLICY HIGHS LIMELIGHT

AUD/USD has built an intermediate cushion near 0.6660, further downside looks likely.

Federal Reserve is expected to remain hawkish as higher oil prices have propelled US inflation expectations.

Reserve Bank of Australia is expected to hike rates further to 3.80% as inflation is extremely skewed from desired levels.

AUD/USD has delivered a breakdown of the Head and Shoulder chart pattern whose neckline was placed from 0.6660.

AUD/USD has gauged an intermediate cushion around 0.6660 after a downside move in the Asian session. The Aussie asset has attempted a decent recovery but is likely to remain on the tenterhooks as investors are awaiting the release of United States ISM Manufacturing PMI data for fresh impetus. The Australian Dollar would face enormous volatility as investors are preparing for the interest rate decision by the Reserve Bank of Australia (RBA), which will be announced on Tuesday.

S&P500 futures are auctioning in a negative trajectory in the early European session amid higher oil prices propelled by fears of further oil production cuts by OPEC , portraying a risk-aversion theme. The burden of higher oil prices will be transferred to producers, which will force them to hike the prices of offerings at factory gates. Eventually, households would be the major victim, which might result in weaker retail demand.

The demand for US government bonds has tumbled amid fresh fears of a rebound in global inflation inspired by higher oil prices. The 10-year US Treasury yields have scaled to near 3.52%.