- The aussie rebounds from 0.6210 and erases the losses of the previous two days.
- The speculations of the Fed and the intervention of the BOJ affect the dollar.
- AUD/USD is expected to remain capped below 0.6390.
The AUD has staged a strong recovery in the American session on Friday. The pair rebounded from session lows at 0.6210, recovering levels just below 0.6380 and recovering the drop of the last two days.
The dollar falls on Fed speculation and BOJ intervention
A Wall Street Journal report suggested earlier on Friday that Federal Reserve officials are open to discussing how to signal a smaller rate hike in December, which has hurt demand for the dollar across the board.
The report has offset the impact of hard-line rhetoric from Fed members. Just on Thursday, Philadelphia Fed President Patrick Harker said the entity “will continue to raise rates for some time.”
In addition, an alleged intervention by the Bank of Japan and the Japanese Ministry of Finance has pushed the yen higher across the board. The dollar has fallen more than 2.5% in a matter of minutes, which has affected all dollar crosses.
AUD/USD unlikely to appreciate beyond 0.6390 in the near term UOB
From a longer-term perspective, UOB’s FX analysts remain skeptical about the possibility of a sustained uptrend: “Our latest account from Tuesday (Oct 18, cash at 0.6295) still holds. As we have Featured, AUD is likely to consolidate and trade between 0.6190 and 0.6390 for now.”
Technical levels to watch
Source: Fx Street
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