- AUD/USD gained some traction for the second successive day amid subdued USD demand.
- Signs of stability within the markets undermined the USD and benefitted the risk-sensitive aussie.
- Recession fears, Fed price hike bets to restrict the USD fall and cap the pair ahead of the US CPI.
The AUD/USD pair constructed on the in a single day bounce from the 0.6700 neighbourhood, or over a two-year low and edged larger for the second straight day on Wednesday. The uptick prolonged via the European session and lifted spot costs to a two-day excessive, across the 0.6785 area within the final hour.
The US greenback oscillated in a slim buying and selling band beneath a two-decade excessive touched on Tuesday amid indicators of stability within the monetary markets, which, in flip, supplied help to the risk-sensitive aussie. The uptick, nonetheless, lacked follow-through shopping for and runs the chance of really fizzling out fairly shortly.
Growing worries a few potential international recession ought to maintain a lid on any optimistic transfer. Apart from this, expectations that the Fed would hike rates of interest at a quicker tempo to curb hovering inflation ought to proceed to behave as a tailwind for the safe-haven USD and cap the upside for the AUD/USD pair.
It is price recalling that the FOMC minutes launched final week indicated that one other 50 or 75 bps price hike is probably going on the July assembly. Policymakers additionally emphasised the necessity to struggle inflation even when it leads to an financial slowdown. Hence, the main focus stays on the US client inflation figures.
The headline US CPI, due later through the early North American session, is predicted to rise from the 8.6% YoY price in May to eight.8% YoY in June. A stronger-than-expected print will reaffirm hawkish Fed expectations and enhance the buck, which, in flip, ought to exert strain on the AUD/USD pair.
Even from a technical perspective, spot costs have been trending decrease over the previous 4 weeks or so alongside a downward-sloping channel. This factors to a well-established short-term bearish development for the AUD/USD pair, suggesting that any subsequent transfer up may nonetheless be seen as a promoting alternative.
Technical ranges to look at