The Australian dollar is the best performing G10 currency today, following the release of RBA minutes. The document included an important change from the previous one – RBA noted that recent developments like accelerating inflation and wage growth as well as solid economic indicators may warrant a quicker start to the monetary tightening cycle. Earlier, RBA claimed that rate hikes are still at least one year away. Having said that, it should not come as a surprise that AUD caught a bid and AUDUSD is trading 0.7% higher on the day. On the flip side, some potentially worrying news for the Australian dollar surfaced today as well. Chinese authorities imposed a lockdown in 5 districts of Tangshan city. Tangshan is an important steel-making center in China and strict restrictions in the city would threaten coal demand. This, in turn, would be negative for AUD as the Australian economy is an important export of coal and China is a buyer. Covid-19 situation in the region is an important factor to watch for AUD traders.
Taking a look at the AUDUSD chart at H4 interval, we can see that the pair managed to halt the downward move at 61.8% retracement of the upward move launched in mid-March (0.7350 area). Upward move was launched overnight and the nearest resistance zone to watch can be found ranging between 50-period moving average (green line) and 50% retracement at 0.7410. A key near-term resistance is marked with the upper limit of a local market geometry at 0.7437. A break above this level would hint a reversal of short-term trend.