AUD/USD breaks above key 0.9952, targets 1.0006 amid hawkish market talks

As expected, the Australian central bank left its official rate unchanged at 4.75 percent at its policy review on Tuesday but not many analysts are buying the argument of a long pause from now, with some of them even seeing the next hike likely in the first quarter of 2011.

Fundamentals for the commodity currency now back AUD/USD targeting 1.0006, as the 61.8 percent Fibonacci from 1.0181 to 0.9723 projects.

After breaking above the key 0.9952 (50 percent Fibonacci), the pair rose to a high of 0.9964 before falling to 0.9908 by 3:16 GMT, still above Monday's close of 0.9897.

Bernanke's recent remarks about the likelihood of expanding the $600 billion asset buyback by the Federal Reserve is also weighing in the market as dollar-negative.

However, with momentum indicators implying the pair as overbought, one should also be prepared for a fall below Monday's low of 0.9847 and should view the consolidation around that level as a short-term top formation at 0.9964.

US October consumer credit data is due at 20:00 GMT, which may impact the pair. Analysts widely expect the credit disbursals to fall by $1 billion compared with a rise of $2.15 billion in September.

The dollar is also recieving support from uncertainties surrounding the euro bond issue which is hurting the single currency. Obama's plans to extend a Bush-time tax holiday scheme is also helping the greenback.