AUD/USD slumps 50-pips as RBA ends April 2024 bond target of 0.1%
|- AUD/USD takes offers around 0.7500 following RBA’s full-stop to YCC.
- RBA matches market forecasts on rates, abandons yield curve target.
- Market sentiment dwindles amid cautious mood ahead of key central bank events, keeping USD afloat.
- Easing covid fears, softer US data and a light calendar before Fed favored buyers of late.
AUD/USD holds onto the early Asian losses, dropping over 50 pips to conquer the 0.7500 following the Reserve Bank of Australia’s (RBA) late move during Tuesday. That said, the quote prints 0.36% intraday losses while taking the offers near 0.7495, with the recently flashed intraday low of 0.7485.
The Aussie central bank matched wide market forecasts of keeping the benchmark rate unchanged at around 0.10%. However, the dumping of the Yield Curve Control (YCC) triggered the latest south-run confirming the rising wedge bearish chart pattern.
Read: Breaking: RBA leaves OCR unchanged at 0.10%, abandons yield curve target
In addition to the RBA move, cautious mood ahead of crucial central bank events and mixed economics weigh on the risk appetite, underpinning the US dollar’s safe-haven demand. The market anxiety could also be witnessed by mildly offered stock futures despite the firmer Wall Street closing and sluggish US Treasury yields.
Further, an appeal from China’s Ministry of Commerce to ensure food supplies in winter also challenges the market sentiment, dragging the AUD/USD prices. Additionally, easing prices of Australia’s main export item, iron ore also please the pair sellers. That said, Dalian iron ore slumps around 8.0% on the day, near 580 yuan per ton at the latest.
On the contrary, US Treasury Secretary Janet Yellen’s rejection of reflation fears and recently easing inflation expectations from the US, per the 10-year breakeven inflation rate per the St. Louis Federal Reserve (FRED) data, favor the AUD/USD buyers. Also on the positive side could be Australia's recently downbeat COVID-19 numbers and firmer vaccinations, not to forget easing of travel norms. Furthermore, mixed figures of the US PMI for October and Australia's latest housing and activity figures confuse the traders. However, the Fed Clevland’s version of the median PCE Inflation rate rockets higher of late, allowing the US Federal Reserve (Fed) hawks to remain hopeful and poke the Aussie bulls.
Moving on, the pre-Fed sentiment can test the AUD/USD traders but the confirmation of the bearish chart pattern keeps sellers hopeful.
Technical analysis
AUD/USD teases a bearish chart pattern confirmation, namely rising wedge, around four-month high as bulls seem to have tired of late. Also showing the bullish exhaustion are the MACD and RSI lines. Hence, a clear downside break of 0.7490 will trigger the quote’s fresh south-run targeting the theoretical level near 0.7390-80. However, the 100-SMA level of 0.7455 offers an intermediate halt. Alternatively, further recoveries of the pair may aim for the 0.7550 level before hitting the resistance line of the bearish chart pattern around 0.7560.
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