- AUD/USD has stretched its downside below 0.6710 amid a recovery in the USD Index.
- Fed policymakers are not ready to tone down their hawkish stance on interest rates despite slowdown fears.
- The Australian Dollar has faced immense pressure after mixed preliminary S&P PMI data.
The AUD/USD pair has extended its downside to near 0.6714 in the early London session. The Aussie asset is expected to move south further as the US Dollar Index (DXY) has shown a recovery move after building a base around 101.80.
The USD Index has scaled to near 101.86 and is expected to accelerate further. Investors are pouring funds into the USD Index amid a cautionary mood. S&P500 futures are flat in early Europe after three bearish trading sessions to dodge quarterly result season-inspired volatility. Meanwhile, the US Treasury yields are still struggling for recovery. The return provided on 10-year US Treasury yields is hovering around 3.52%.
The headline from a leaked US Intelligence report that China is building sophisticated cyber weapons to “seize control” of enemy satellites, rendering them useless for data signals or surveillance during wartime, as reported by Financial Times, has also increased appeal for the USD Index as a safe-haven.
Despite knowing the fact that United States manufacturing activities have been contracting for the past few months and labor market conditions have cool down further amid rising weekly jobless claims, Federal Reserve (Fed) policymakers are not ready to tone down their hawkish stance on interest rates.
Cleveland Federal Reserve President Loretta Mester reiterated on Thursday that the Fed has more work to do with inflation in the US staying too high, per Reuters. He further added, "Fed will need to hike policy rate to over 5% and hold there for a while."
The Australian Dollar is facing immense pressure after mixed preliminary S&P PMI (April) data. Manufacturing PMI softened heavily to 48.1 from the consensus of 48.8 and the former release of 49.1. While Services PMI jumped to 52.6 vs. the prior release of 50.7.
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 remains vulnerable near 0.6200 after Chinese inflation data
AUD/USD remains vulnerable near the 0.6200 mark following mixed Australian data and as expected China's inflation numbers. The RBA's dovish shift and China's economic woes add to the weight on the Aussie as risk sentiment remains tepid. Fedspeak eyed.
USD/JPY: Bears attack 158.00 on strong Japanese wage growth data
USD/JPY drifts lower and attacks 158.00 early Thursday after data showed that base salaries for Japanese workers increased at the fastest pace in 32 years. The data backs the case for the BoJ to raise interest rates, which, along with the cautious market mood, benefits the safe-haven Yen and drags the pair away from a multi-month top.
Gold retreats from monthly high as Fedspeak grabs attention
Gold price pulls back from a monthly high of $2,670 set on Wednesday as buyers turn cautious after discouraging China’s inflation data and the hawkish Federal Reserve Minutes. All eyes now remain on a bunch of Fed speakers due to speak later amid US holiday-thinned market conditions.
Ripple's XRP eyes recovery following executives' dinner with Donald Trump
Ripple's XRP is up 2% on Wednesday following positive sentiments surrounding its CEO Brad Garlinghouse's recent dinner with incoming US President Donald Trump. If the recent recovery sentiment prevails, XRP could stage a breakout above the upper boundary line of a bullish pennant pattern.
Bitcoin edges below $96,000, wiping over leveraged traders
Bitcoin's price continues to edge lower, trading below the $96,000 level on Wednesday after declining more than 5% the previous day. The recent price decline has triggered a wave of liquidations across the crypto market, resulting in $694.11 million in total liquidations in the last 24 hours.
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.