- AUD/USD has slipped sharply to near 0.6700 as RBA Lowe trims its hawkish stance on rate guidance.
- RBA Lowe cited that consumer spending is showing resilience after remaining vulnerable.
- A hawkish stance is expected from Fed Powell on interest rate guidance ahead.
The AUD/USD pair has plunged to near 0.6700 after surrendering the critical support of 0.6734. The asset has witnessed a vertical drop as Reserve Bank of Australia (RBA) Governor Philip Lowe has favored for slow down the pace of hiking the Official Cash Rate (OCR). Also, the RBA policymaker sees resilience in consumer spending after remaining lower due to the higher inflation rate.
On Tuesday, the RBA announced a fourth consecutive 50 basis points (bps) rate hike and elevated the Official Cash Rate (OCR) to 2.85%. Apart from that, RBA Lowe cited that the central bank sees interest rates at 3.85% and the inflation rate will top around 7%.
In the early Tokyo session, the asset witnessed a steep fall after the release of the Australian trade data. The commodity-linked currency reported a decline in monthly export data by 9.9% against an expansion of 5.1%. Also, imports have accelerated by 5.2% vs. 0.7% the prior release. The Trade Balance has trimmed dramatically to 8,733M against the expectation of 14,500M. It is worth noting that the Australian economy is highly sensitive to external trade data and a significant decline in the same is critical for the aussie bulls.
Meanwhile, the US dollar index (DXY) has turned sideways after a rebound move to near 109.60. The asset is expected to continue its lackluster movement further as investors are awaiting the speech from Federal Reserve (Fed) chair Jerome Powell. As the price rise index is highly deviated from the desired rate, Fed Powell will continue its ‘hawkish’ stance on interest rates guidance. Apart from that, a third consecutive rate hike by 75 bps could be discussed for September monetary policy meeting.
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 drops to two-year lows below 1.0400 after weak PMI data
EUR/USD stays under bearish pressure and trades at its weakest level in nearly two years below 1.0400. The data from Germany and the Eurozone showed that the business activity in the private sector contracted in early November, weighing on the Euro.
GBP/USD falls to six-month lows below 1.2550, eyes on US PMI
GBP/USD extends its losses for the third successive session and trades at a fresh fix-month low below 1.2550 on Friday. Disappointing PMI data from the UK weigh on Pound Sterling as market focus shift to US PMI data releases.
Gold price refreshes two-week high, looks to build on momentum beyond $2,700 mark
Gold price hits a fresh two-week top during the first half of the European session on Friday, with bulls now looking to build on the momentum further beyond the $2,700 mark. This marks the fifth successive day of a positive move and is fueled by the global flight to safety amid persistent geopolitical tensions stemming from the intensifying Russia-Ukraine war.
S&P Global PMIs set to signal US economy continued to expand in November
The S&P Global preliminary PMIs for November are likely to show little variation from the October final readings. Markets are undecided on whether the Federal Reserve will lower the policy rate again in December.
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.