A combination of supporting factors assisted AUD/USD to regain positive traction on Monday. The risk-on impulse undermined the safe-haven USD and benefitted the perceived riskier aussie. Upbeat Australian PMI prints provided an additional boost and remained supportive of the move. The AUD/USD pair maintained its strong bid tone through the early European session and was last seen trading near the daily high, around the 0.7215 region.
Adding to this, upbeat Australian PMI prints provided an additional boost to the domestic currency and remained supportive of the AUD/USD pair intraday move up. In fact, the IHS Markit Flash Manufacturing PMI pointed to a further expansion in February and rose to 57.6 from the 55.1 previous. Moreover, the gauge for the services sector jumped to 56.4 – an eight-month high.
The data further boosted market bets for an interest rate hike by the Reserve Bank of Australia (RBA). On the other hand, uncertainty about the Fed's tightening plans further weighed on the buck and extended additional support to the AUD/USD pair. It is worth recalling that the January FOMC meeting minutes failed to reinforce expectations for a 50 bps rate hike in March.
Moreover, the latest geopolitical developments might force the Fed to adopt a less aggressive policy stance to combat high inflation. This, along with the recent pullback in the US Treasury bond yields, kept the USD bulls on the defensive.