AUD/USD climbs back above 0.6600 on USD weakness and RBA comments

• The aggressively toned comments from Federal Reserve officials failed to prop up the US dollar.
• Sentiment turned positive, though China’s Covid-19 cases peaked near 28,000.
• Reserve Bank of Australia Governor Lowe is putting 50 basis points back on the table if need be.

The Australian dollar (AUD) It is picking up some ground in the North American session after hitting a daily low below 0.6600 amid improving sentiment. Factors such as the hawkish comment from Federal Reserve (Fed) officials and the Covid-19 outbreak in China were no excuse for the AUD to rise against the US dollar (USD). At the time of writing, AUD/USD is trading at 0.6629.

Positive sentiment underpins the Australian dollar

Wall Street opens green. On Monday, a number of US central bank policy makers. The president of the San Francisco Fed, Mary Daly, expressed concern about the excess tension, and expects rates to initially stand at 5%, and rates could rise from there, depending on the data. Later, Cleveland Fed President Loretta Mester said interest rates could be lowered in the next month. Mester commented that the pause is not an option and agreed with Daly, expecting rates to be around 5%.

Elsewhere, the Covid-19 outbreak in China is grabbing headlines after the disease has caused three deaths in the past three days. Beijing increased the restrictions, and those who arrived had to undergo three PCR tests in the first three days. Some schools switched to online learning, while some districts in Beijing asked citizens to stay home for at least five days.

In the Asian session, Reserve Bank of Australia (RBA) Governor Philip Lowe said that if wages go up, that will keep inflation in Australia around “seven per cent, plus or minus (a little bit)”. , adding that the wage spiral of the 1970s and 1980s turned out to be a disaster. Lowe sympathized with workers who cannot accept their wages falling behind, though he added that inflation will hit the RBA’s target if the country can make it through this period. He expects to keep raising rates and even put a 50 basis point hike on the table.

What to watch out for

The Australian economic calendar will include the S&P Global PMIs for November. In the US, the Fed speeches will continue, with Loretta Mester, Esther George and James Bullard giving statements.

AUD/USD Key Technical Levels