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AUD / USD extends correction, hits new lows below 0.7350

  • The US dollar is rising across the board.
  • The dollar cuts weekly losses late on Friday.
  • AUD / USD turns negative for the week, falls towards 0.7350.

The AUD/USD It broke below 0.7365 during the US session and fell to 0.7343, hitting a new two-day low. The key driver has been a strong US dollar across the board. The dollar gained momentum on the London correction.

The DXY posted a loss and was up 0.30% to 92.15, even as US yields decline further. The 10-year yield stands at 1.22%, about to test the weekly low. The key US economic report was the PCE core deflator, considered a critical inflation number for the Federal Reserve. It was up 0.4% in June, versus expectations for a 0.6% increase.

From the Fed to the RBA

After the Fed, the focus is now on the Reserve Bank of Australia (RBA) which will have its monetary policy meeting next week. “We believe that lawmakers in Sydney (a city that is about to spend the entire month of August locked in) will not make any amendments to the current political stance after the adjustments announced in early July. The jump in inflation to 3.8% in the second quarter should be ruled out as transitory, and the Bank will probably wait for further indications from the labor market before reacting on the policy side, ”ING analysts wrote. They add that the recent spread of the Delta variant is probably another reason “why the RBA should stop sounding more aggressive or optimistic about the recovery at this meeting.”

The Australian dollar is about to end the week as the worst performer in the G10 space, affected by the divergence of monetary policy. AUD / USD was unable to sustain gains and held above 0.7400 on Friday; on track to fifth consecutive negative weekly result. AUD / NZD is heading towards the lowest weekly close since November last year.

Technical levels

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