- AUD/USD has witnessed barricades around 0.6970, downside looks favorable ahead of Fed Powell’s speech.
- Fed’s Powell is expected to sound hawkish on interest rates, keeping in mind the consequences.
- China’s announcement of liquidity infusion may support Australian exports.
The AUD/USD pair has witnessed selling pressures after facing barricades around 0.6970 in the Asian session. The asset is expected to display more losses as the US dollar index (DXY) is expected to pick up significant bids ahead. Investors are expected to underpin the greenback further as odds of a hawkish commentary on interest rates from Federal Reserve (Fed) chair Jerome Powell are advancing firmly.
Mixed responses from the market veterans on Fed’s next move over interest rates kept the DXY on tenterhooks in the past few trading sessions. There were different responses that either Fed should stick to its path of hiking interest rates at a severe pace or it should slow down due to the consequences of a liquidity squeeze in the market.
However, commentary from Reserve Bank of New Zealand (RBNZ)’s Governor Adrian Orr at Jackson Hole Economic Symposium has provided much clarity. As per RBNZ’s Orr, their respective central bank will announce at least a couple of interest rates to safeguard the economy from price pressures, being their foremost priority, to preserve the retail demand. And, in the execution of that, the economic activities will have to bear the slowdown. And, now a similar kind of commentary is expected from Fed’s Powell.
On the Australian front, investors are still in the hangover of the downbeat Aussie PMI data, released on Tuesday. Considering its trade relations, the Chinese economy has announced an infusion of one trillion Chinese Yuan (CNY) in its economy, which may also boost the Australian exports market apart from the Chinese economic activities. It is worth noting that Australia is a leading trading partner of China and growth prospects in China accelerate Australian exports significantly.
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