AUD/USD moves little post-US Retail Sales, focus remains on FOMC minutes
|- AUD/USD gained traction for the second successive day amid modest USD weakness.
- Hawkish Fed expectations, upbeat US Retail Sales helped limit any further USD losses.
- Investors might prefer to wait on the sidelines ahead of the FOMC meeting minutes.
The AUD/USD pair retreated a few pips from the weekly high touched earlier this Wednesday and traded with modest intraday gains, around the 0.7165 region post-US macro releases.
Following a brief consolidation phase through the early part of the trading on Wednesday, the AUD/USD pair gained some positive traction and built on the overnight rebound from the 0.7100 mark. Easing fears about the risk of Russia invading Ukraine continued undermining the safe-haven US dollar, which, in turn, was seen as a key factor that benefitted the perceived riskier aussie.
That said, rising bets for a 50 bps Fed rate hike in March acted as a tailwind for the buck, which further drew support from mostly upbeat US economic data. In fact, the US Census Bureau reported that monthly Retail Sales recorded strong-than-expected growth of 3.8% in January. Excluding autos, core retail sales also surpassed estimates and climbed by 3.3% during the reported month.
A sharp improvement in consumer spending reinforced market expectations that the Fed would adopt a more aggressive policy response to contain stubbornly high inflation. This was evident from elevated US Treasury bond yields, which helped limit the intraday USD losses. Traders, however, refrained from placing aggressive bets ahead of the FOMC meeting minutes, due later during the US session.
Investors will look for fresh clues about the likely pace of the Fed's policy tightening cycle, which will play a key role in influencing the near-term USD price dynamics. Apart from this, the broader market risk sentiment would provide some impetus to the AUD/USD pair and allow traders to grab short-term opportunities.
Technical levels to watch
Information on these pages contains forward-looking statements that involve risks and uncertainties. Markets and instruments profiled on this page are for informational purposes only and should not in any way come across as a recommendation to buy or sell in these assets. You should do your own thorough research before making any investment decisions. FXStreet does not in any way guarantee that this information is free from mistakes, errors, or material misstatements. It also does not guarantee that this information is of a timely nature. Investing in Open Markets involves a great deal of risk, including the loss of all or a portion of your investment, as well as emotional distress. All risks, losses and costs associated with investing, including total loss of principal, are your responsibility. The views and opinions expressed in this article are those of the authors and do not necessarily reflect the official policy or position of FXStreet nor its advertisers.