AUD/USD Bulls Recover 0.6900 as Dollar Wobbles

• A boost in risk appetite favored currencies such as the Australian dollar.
• The US housing market continues to deteriorate, as evidenced by the collapse in Existing Home Sales.
• Fed officials favor a slowdown in rate hikes, though the “higher longer” stance remains.

The AUD/USD It rose midway through the North American session on Friday, after a grim jobs report from Australia sent it falling below 0.6900. On Friday, the story is different, with AUD/USD picking up some ground, while the US dollar (USD) is matching its previous gains. At time of writing, AUD/USD is trading at 0.69600, up 0.74% on the day.

AUD/USD rose, supported by investor optimism and USD weakness

Wall Street continues to portray the positive mood of investors. Data from the United States (US) shows a preliminary deterioration, as December Existing Home Sales fell 1.5%, its lowest level since November 2010, according to the National Association of Realtors.

“December was another difficult month for buyers, who continue to grapple with limited inventory and high mortgage rates,” said NAR chief economist Lawrence Yun. “However, sales are expected to pick up soon as mortgage rates have declined markedly after peaking late last year.”

Meanwhile, a pullback in the Dollar Index, which tracks the dollar against its peers, prints minimal gains of 0.06% to 102.123 after hitting a daily high of 102,552. By contrast, US Treasury yields rose, with the 10-year Treasury yield rising nine basis points to 3,488%.

Meanwhile, a couple of Fed officials crossed the news. Philadelphia Fed President Patrick Harker opened the door for a reduction in interest rate hikes, saying that “25 basis point hikes will be appropriate going forward,” and expects the US economy to grow a 1% and the unemployment rate to jump to 4.5% from 3.5%. Later, KansasCiti Fed President Esther George said the Federal Reserve must be “patient” to see if inflation in the service sector is abating.

AUD/USD Key Technical Levels