AUD/USD Bulls Hold Course as Dollar Falls

• AUD/USD remains in positive territory despite risk appetite.
• The Australian economy expanded less than expected in the third quarter, eyes remain on the data.

The pair AUD/USD has risen on the day, from a low of 0.6668 to a high of 0.6734. News that authorities have relaxed some of the country’s zero COVID rules sparked risk appetite in the Asian session that spilled over into North American markets on Wednesday. The dollar has weakened on concerns that rising interest rates could push the US economy into recession.

Investors have welcomed the news that China is preparing its population to live with the disease, although fears persist that the US central bank will hang on to a longer rate hike cycle, weighing on stocks. Americans on Wednesday.

Earlier this week, the Institute for Supply Management (ISM) noted that its non-manufacturing PMI rose to 56.5 last month from 54.4 in October, indicating that the service sector, which accounts for more than two-thirds of economic activity US, remained resilient to rising interest rates.

The data beat forecasts that the non-manufacturing PMI would fall to 53.1. Although this data, combined with surprisingly strong November Nonfarm Payrolls data last Friday, had raised optimism about avoiding a recession in 2023, investors fear the Fed will raise rates again by 75 basis points in the December meeting.

Surprising non-farm payrolls data last Friday in November had also raised optimism that a recession could be avoided in 2023, however investors fear the Fed will raise rates again by 75 basis points at the December meeting, This is a drag on high beta currencies like the Aussie. More economic data will be released this week, including weekly jobless claims, the Producer Price Index and the University of Michigan survey of Consumer Sentiment, to be watched for clues as to what to expect. from the Fed on December 14.

Meanwhile, the Australian dollar came under some pressure overnight after data showed the Australian economy expanded less than expected in the third quarter, as persistent inflation and rising interest rates slowed the downturn. consumption. The data follows comments from Reserve Bank of Australia Governor Philip Lowe who said that “the size and timing of future interest rate hikes will continue to be determined by incoming data.”