- A combination of supporting factors lifts AUD/USD to a nearly three-week high on Wednesday.
- Hotter-than-expected Australian CPI report boosts the aussie amid sustained USD selling bias.
- Reduced bets for more aggressive Fed rate hikes and sliding US bond yields weigh on the USD.
The AUD/USD pair gains traction for the second successive day on Wednesday and builds on its intraday ascent through the early European session. This also marks the fourth day of a positive move in the previous five and lifts spot prices to a nearly three-week high, around the 0.6450-0.6455 region in the last hour.
The US dollar remains under some selling pressure amid reduced bets for a more aggressive tightening by the Fed, which, in turn, is seen as a key factor pushing the AUD/USD pair higher. In fact, the softer US macro data released on Tuesday pointed to signs of a slowdown in the world's largest economy and might force the US central bank to soften its hawkish stance. This is reinforced by a further pullback in the US Treasury bond yields and keeps the USD bulls on the defensive.
The Australian dollar, on the other hand, draws additional support from hotter-than-expected domestic consumer inflation figures. The Australian Bureau of Statistics (ABS) reported that the headline CPI rose 1.8% in the September quarter and the annual rate shot up to 7.3% - the highest since 1990. The data suggests that the Reserve Bank of Australia may have acted prematurely in slowing the pace of policy tightening in October and will need to raise rates to combat inflation.
The combination of fundamental factors pushes the AUD/USD pair through the 0.6400-0.6410 resistance zone, prompting some technical buying. This might have also set the stage for a further appreciating move. That said, a softer risk tone - amid growing worries about a deeper global economic downturn, might hold back traders from placing aggressive bullish bets around the risk-sensitive aussie. This warrants caution for bulls and positioning for any further gains.
Market participants now look forward to the US economic docket, featuring the release of New Home Sales data later during the early North American session. This, along with the US bond yields and the broader risk sentiment, will influence the USD price dynamics and provide some impetus to the AUD/USD pair. The focus will then shift to important US macro releases on Thursday, which should determine the near-term trajectory ahead of the FOMC meeting and the NFP report next week.
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. The author will not be held responsible for information that is found at the end of links posted on this page.
If not otherwise explicitly mentioned in the body of the article, at the time of writing, the author has no position in any stock mentioned in this article and no business relationship with any company mentioned. The author has not received compensation for writing this article, other than from FXStreet.
FXStreet and the author do not provide personalized recommendations. The author makes no representations as to the accuracy, completeness, or suitability of this information. FXStreet and the author will not be liable for any errors, omissions or any losses, injuries or damages arising from this information and its display or use. Errors and omissions excepted.
The author and FXStreet are not registered investment advisors and nothing in this article is intended to be investment advice.
Recommended content
Editors’ Picks
AUD/USD: Next upside target comes at 0.6550
AUD/USD managed well to shrug off the marked advance in the Greenback as well as geopolitical tensions, regaining the area above the 0.6500 hurdle ahead of preliminary PMIs in Australia.
EUR/USD: Further losses now look at 1.0450
Further strength in the US Dollar kept the price action in the risk-associated assets depressed, sending EUR/USD back to the 1.0460 region for the first time since early October 2023 prior to key releases in the real economy.
Gold faces extra upside near term
Gold extends its bullish momentum further above $2,660 on Thursday. XAU/USD rises for the fourth straight day, sponsored by geopolitical risks stemming from the worsening Russia-Ukraine war. Markets await comments from Fed policymakers.
Ethereum Price Forecast: ETH open interest surge to all-time high after recent price rally
Ethereum (ETH) is trading near $3,350, experiencing an 10% increase on Thursday. This price surge is attributed to strong bullish sentiment among derivatives traders, driving its open interest above $20 billion for the first time.
A new horizon: The economic outlook in a new leadership and policy era
The economic aftershocks of the COVID pandemic, which have dominated the economic landscape over the past few years, are steadily dissipating. These pandemic-induced economic effects are set to be largely supplanted by economic policy changes that are on the horizon in the United States.
Best Forex Brokers with Low Spreads
VERIFIED Low spreads are crucial for reducing trading costs. Explore top Forex brokers offering competitive spreads and high leverage. Compare options for EUR/USD, GBP/USD, USD/JPY, and Gold.