- AUD/USD comes under renewed selling pressure after the RBA.
- Disappointing Chinese PMI and RBA’s decision to keep rates on hold keep Australian dollar flows away.
- Bets on a further Fed rate hike in 2023 prop up USD and contribute to AUD/USD slide.
AUD/USD has lost close to 45 pips since the start of Tuesday, sliding to a fresh 1-week low of 0.6416 following the RBA’s announcement to keep interest rates unchanged.
As expected, the RBA decided to hold the Official Cash Rate (OCR) at 4.10% for the third time in a row at the end of the September meeting. In the statement accompanying the decision, the central bank said the decision to leave it unchanged gave more time to assess the impact of the interest rate hike to date and the economic outlook. This, along with the weakness of the Chinese PMI, weakens the Australian dollar (AUD). Aside from this, the appearance of some US dollar (USD) buying contributes to the offered tone surrounding the AUD/USD pair.
Indeed, the Dollar Index (DXY), which tracks the greenback against a basket of currencies, is holding firm just below a nearly three-month high reached in August and remains well supported by expectations that the Federal Reserve (Fed) will keep rates higher for longer. Despite the signs of easing in the US labor market, the markets are still pricing in the possibility of a further 25 basis point rise at the end of the year. This, in turn, continues to support high US Treasury yields, which support the Dollar and weigh on AUD/USD.
The aforementioned fundamental undercurrent favors bears and suggests that the path of least resistance for prices is down. Therefore, a fall towards the yoy low, around the 0.6365 zone hit on August 17th, seems a clear possibility. Some further selling will be seen as a new trigger for bearish traders and pave the way for an extension of the well-established AUD/USD downtrend seen since July 14, from near the 0.6900 level, which constituted the double top. bearish on the daily chart.
AUD/USD Technical Levels
Source: Fx Street
I am Joshua Winder, a senior-level journalist and editor at World Stock Market. I specialize in covering news related to the stock market and economic trends. With more than 8 years of experience in this field, I have become an expert in financial reporting.
