AUD/USD drops below 0.6700 as USD gathers strength ahead of FOMC minutes

• Wage Price Index in Australia rose 0.5% in Q4 as expected.
• US Dollar Index extends rally toward multi-year highs. 
• FOMC will release minutes of its January 28-29 meeting at 19 GMT.

The AUD/USD pair staged a rebound during the Asian trading hours and rose to a daily high of 0.6708 but lost its traction. As of writing, the pair was trading at 0.6688, adding only 0.06% on a daily basis.

The data from Australia on Wednesday showed that the Wage Price Index rose 0.5% on a quarterly basis in the fourth quarter as expected and the Westpac Leading Index improved to 0.05% in January from 0.01%. Nevertheless, market participants largely ignored these data to allow the pair to post technical recovery gains. Major Asian equity indexes' relatively upbeat performance provided a boost to the risk-sensitive AUD as well.

In the meantime, S&P Global Ratings argued that the coronavirus outbreak will have a "short-term blow" to the Chinese economic growth in the first quarter to ease concerns over a long-lasting negative impact of the epidemic on the global economy. 

DXY climbs higher ahead of FOMC minutes

On the other hand, the US Dollar Index (DXY) continues to push higher on Wednesday to reflect a broad-based USD strength. At the moment, the index is at its highest level since early October at 99.53 and looks to test the multi-year highs that it set at 99.67 a few months ago.

During the American trading hours, the FOMC will publish the minutes of its January 28-29 monetary policy meeting. Additionally, FOMC members Kashkari, Kaplan and Barkin will be delivering speeches.

Technical levels to watch for