• AUD/USD grinds higher after two consecutive quarterly, monthly losses.
• Softer-than-expected US data underpin risk-on mood and favor Aussie pair’s recovery from one-month low.
• Hawkish Fed talks, hopes of RBA’s pause in rate hikes prod pair buyers.
• RBA becomes the key event, China Manufacturing PMI will guide immediate moves.

AUD/USD begins the key week with a cautious mood as it makes rounds to 0.6660 after Friday’s stellar run-up, following the two consecutive weekly, monthly and quarterly losses. In doing so, the Aussie pair aptly portrays the market’s anxiety ahead of Tuesday’s crucial Reserve Bank of Australia (RBA) Monetary Policy Meeting. Also important to watch is Wednesday’s Federal Open Market Committee (FOMC) Monetary policy meeting Minutes and Friday’s US jobs report, not to forget China’s Caixin Manufacturing PMI and the US ISM PMIs for June.

That said, the Aussie pair rallied the most in two weeks the previous day after the Federal Reserve’s (Fed) preferred inflation gauge prod hawkish expectations from the US central bank with the smallest yearly gain in six months.

US Personal Consumption Expenditure (PCE) Price Index, for May, came in at 0.3% MoM and 4.6% YoY versus market expectations of reprinting the 0.4% and 4.7% figures for monthly and yearly prior readings.

It should be noted that the downbeat US data bolstered equities and offered additional upside boost to the risk-barometer pair.

Furthermore, hopes of China’s heavy investments to lift the world’s second-largest economy from losing the recovery momentum also allowed the Aussie pair to remain firmer.

Alternatively, Fed Chair Jerome Powell’s support for “two more rate hikes in 2023” joined downbeat Aussie inflation numbers and PMIs to flag the RBA’s halt in rate hikes to weigh on the AUD/USD price.

Above all, the market’s lack of growth optimism joins the fears of the RBA’s no rate hike, versus the Fed’s another rate increase, to challenge the AUD/USD pair. However, the Tuesday’s RBA Interest Rate decision will be crucial to watch as the Australian central bank surprised markets with a rate increase in the last two consecutive meetings.

For today, China’s Caixin Manufacturing PMI for June, expected 50.2 versus 50.9 prior, will precede the US ISM Manufacturing PMI for the said month, likely to improve to 47.2 from 46.9 previous readings, to direct the AUD/USD pair ahead of Tuesday’s RBA meeting