- The dollar gains momentum amid rising yields and risk aversion.
- AUD / USD is heading for the second consecutive weekly decline.
The AUD/USD it fell further and is trading at 0.7265, the lowest level in three weeks. The aussie is poised to post the second consecutive weekly loss amid a stronger US dollar.
The 10-year US yield break above 1.35% boosted the dollar across the board. The DXY is trading at 93.15, up 0.31%, the highest level since August 27. A modestly lower than expected reading of the UM Consumer Confidence did not weaken the dollar. At the same time, stock prices on Wall Street are falling. Risk aversion weighs heavily on the Aussie. The Dow Jones lost 0.52% and the Nasdaq 0.80%.
Next Week: FOMC and RBA Minutes
Market volatility is likely to continue next week with the FOMC meeting. The Federal Reserve is expected to keep monetary policy unchanged; Analysts will be looking for clues about the future of the QE program.
According to analysts at TD Securities, Fed officials will likely signal that they are almost ready to cut back on the buying program. “We expect a formal announcement in December, not November, but we will review our forecast after the meeting. While the median of the dot chart projections for 2022-23 is not likely to change, the math makes any change much more likely to be upward than downward. The 2024 dot chart is likely to show further and gradual adjustment. Average inflation / growth projections for 2021 should be raised / cut. “
In Australia, the key report will be the Reserve Bank of Australia Minutes. “Governor Lowe made the case in favor of the RBA’s September cut decision in his recent speech, but we believe the Minutes could show a debate among the Board on the future shaping of the monetary policy of other G10 central banks and its implications for the RBA’s QE path. The discussion about housing could be more prominent and whether bank loans are “holding up” even when the housing market is red hot, “argue TDS analysts.
Technical levels
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