- Chinese PMI bullish, renewed USD weakness helped AUD / USD gain traction on Wednesday.
- USD bulls did not seem impressed and largely ignored the stronger than expected ADP report.
- Investors seemed reluctant to the long-awaited monetary policy decision from the FOMC.
The pair AUD/USD it traded with a slight positive bias during the early days of the US session, although it seemed to have difficulty capitalizing on the move beyond 0.7450.
The pair gained some positive traction on Wednesday and recovered some of the previous day’s heavy losses, triggered by a less aggressive Reserve Bank of Australia (RBA). Upbeat macroeconomic data from China extended some support to the Australian dollar, which, along with the emergence of new selling around the US dollar, provided a modest rise to the AUD / USD pair.
Meanwhile, the intraday decline in the USD lacked an obvious fundamental catalyst and remained limited amid expectations of an early policy tightening by the Fed. Other than this, a better than expected ADP report, showing That US private sector employers added 571,000 jobs in October, acted as a tailwind for the dollar and limited gains for the AUD / USD pair.
However, the slide remains muffled, at least for now, as investors seemed reluctant to make aggressive bets ahead of the key central bank risk event. The Fed is scheduled to announce its monetary policy decision later in the US session and is expected to begin cutting its bond purchase program by $ 120 billion a month.
Markets have fully appreciated the expected move, suggesting that the focus will be on the monetary policy statement and comments from Fed Chairman Jerome Powell at the post-meeting press conference. Investors will be looking for clues as to the likely time when the Fed will start raising interest rates, which will play a key role in influencing the dollar.
On the other hand, the RBA was not overly concerned about inflation on Tuesday and Governor Philip Lowe downplayed expectations of a take-off in 2022. Divergent outlooks for central bank policy favor bearish traders and support prospects for a extension of the rejection drop from a technically significant 200-day SMA tested last week.
Technical levels
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