- AUD/USD rebounded swiftly from over a two-month low touched earlier this Thursday.
- RBA rate hike bets, the risk-on impulse extended support to the perceived riskier aussie.
- Modest USD pullback from the multi-year peak remained supportive of the recovery move.
- Investors now look forward to the US Q1 GDP report for some meaningful trading impetus.
The AUD/USD pair staged a goodish intraday rebound from the 0.7075 region, or its lowest level since February 7 touched earlier this Thursday. The recovery momentum extended through the early European session and pushed spot prices to a fresh daily high, around the 0.7160 region in the last hour.
The Australian Bureau of Statistics reported on Wednesday that consumer prices in Australia surged at the fastest annual pace in two decades during the first quarter. The data fueled speculation the Reserve Bank of Australia could hike interest rates from record lows as soon as next week. This, along with the risk-on impulse, extended support to the perceived riskier aussie.
On the other hand, the US dollar eased a bit from a five-year high amid a softer tone surrounding the US Treasury bond yields. This, in turn, was seen as another factor that prompted some intraday short-covering around the AUD/USD pair. That said, the prospects for a more aggressive policy tightening by the Fed should act as a tailwind for the buck and cap gains for the major.
The markets now seem convinced that the Fed will hike interest rates by 50 bps when it meets on May 3-4, and again in June and July, and ultimately lift rates to around 3.0% by the end of the year. Apart from this, the deteriorating global economic outlook favours the USD bulls, warranting some caution before positioning for any further appreciating move for the AUD/USD pair.
Market participants now look forward to the US economic docket, highlighting the release of the Advance Q1 GDP report and the usual Weekly Initial Jobless Claims. Traders will further take cues from the US bond yields and the broader market risk sentiment, which will influence the USD price dynamics. This, in turn, should produce some short-term opportunities around the AUD/USD pair.
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
EUR/USD stays near 1.0400 in thin holiday trading
EUR/USD trades with mild losses near 1.0400 on Tuesday. The expectation that the US Federal Reserve will deliver fewer rate cuts in 2025 provides some support for the US Dollar. Trading volumes are likely to remain low heading into the Christmas break.
GBP/USD struggles to find direction, holds steady near 1.2550
GBP/USD consolidates in a range at around 1.2550 on Tuesday after closing in negative territory on Monday. The US Dollar preserves its strength and makes it difficult for the pair to gain traction as trading conditions thin out on Christmas Eve.
Gold holds above $2,600, bulls non-committed on hawkish Fed outlook
Gold trades in a narrow channel above $2,600 on Tuesday, albeit lacking strong follow-through buying. Geopolitical tensions and trade war fears lend support to the safe-haven XAU/USD, while the Fed’s hawkish shift acts as a tailwind for the USD and caps the precious metal.
IRS says crypto staking should be taxed in response to lawsuit
In a filing on Monday, the US International Revenue Service stated that the rewards gotten from staking cryptocurrencies should be taxed, responding to a lawsuit from couple Joshua and Jessica Jarrett.
2025 outlook: What is next for developed economies and currencies?
As the door closes in 2024, and while the year feels like it has passed in the blink of an eye, a lot has happened. If I had to summarise it all in four words, it would be: ‘a year of surprises’.
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.