- The Aussie bounces off 0.6450 and is back above 0.6500.
- US dollar sinks on hopes of a Fed pivot.
- Australian CPI accelerates to a 32-year high.
The AUD remains strongly offered for the second day in a row on Wednesday. The pair has resumed its uptrend, having tested support at 0.6450 earlier today, and explored levels beyond 0.6500 for the first time since early October.
Hopes of a Fed Pivot Hurt the US Dollar
The Dollar remains on the defensive amid mounting evidence that the Fed’s tightening cycle could hurt economic growth before inflation is tamed.
Macroeconomic data on Tuesday showed US house prices slowed for the second consecutive month in August, with rising mortgage prices driving buyers out of the market.
The Fed is expected to approve the fourth consecutive hike of 0.75% after the meeting on November 1-2, but the market begins to price in a 0.50% hike in December. A Wall Street Journal report confirmed this scenario last week, suggesting that Fed officials are discussing how to communicate lower rate hikes for the coming months. This is taking a toll on the US dollar, which has risen across the board in recent months, buoyed by a hawkish Fed.
On the other hand, Australian data showed early on Wednesday that the CPI grew at its fastest pace in 32 years in the third quarter. Annual inflation accelerated to 7.3% versus the 7% forecast by analysts, adding pressure to the RBA to continue raising interest rates, thus boosting demand for the aussie.
Technical levels to watch
Source: Fx Street
With 6 years of experience, I bring to the table captivating and informative writing in the world news category. My expertise covers a range of industries, including tourism, technology, forex and stocks. From brief social media posts to in-depth articles, I am dedicated to creating compelling content for various platforms.
