AUD / USD Recovers 0.7100 After Dropping To New Yearly Low At 0.7062 On Aggressive Comments From Powell

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  • AUD / USD hit a new 2021 low at 0.7062 amid aggressive comments from Fed Chairman Powell.
  • Short-term US bond yields advance, while 10-year yields fall to 1,449%.
  • The US dollar index recovers 96.00 but remains bearish, losing 0.24%.

After cutting some of last Friday’s losses on Monday, the AUD/USD it falls sharply during the day, down 0.34%, trading at 0.7107 at the time of writing. Market sentiment is in risk aversion mode, as shown by the slide in US equities in the comments of Federal Reserve Chairman Jerome Powell, weighed down on risk appetite, with the US dollar index rebounding some daily, down 0.24%, but recovered the figure of 96.00. Meanwhile, short-term US yields are on the rise, while 10-year US Treasury yields are down, to 1,449%, a drop of 8bp.

Money market futures show almost 59 basis points of rate hikes at the end of the following year. On Friday of last week, investors cut some of those bets on the discovery of the new variant of COVID-19 when market participants assessed what its impact on the economy is.

Summarizing some of Fed Chairman Powell’s comments, he said that inflation could no longer be considered “transitory.” He noted that the recent COVID-19 strain, Ómicron, presents “downside risks to employment, economic activity, and growing uncertainty for inflation.”

Powell favors a faster “completion” of the QE program, reiterating that he would speak about the need to “speed up the set-up” at the December meeting.

That said, in the overnight session, market sentiment dimmed as Moderna’s CEO warned that existing vaccines would be less effective against the variant discovered in South Africa than previous strains, prompting a drop. in stock futures around 5:00 am London time.

Therefore, the AUD / USD trader’s focus would be on Wednesday’s economic agenda, although during the week, the US economic agenda could favor USD bulls after the Fed Chairman’s remarks. , Powell. On Wednesday, the US economic calendar will feature ADP’s job change figures for November, a prelude to nonfarm payrolls, to be released on Friday. Additionally, the November ISM Manufacturing PMI and statements from various Fed members, with Federal Reserve Chairman Powell, testified before the US Congress.

The Australian Economic Agenda will publish the AiG Manufacturing Performance Index for October and the Gross Domestic Product for the third quarter quarterly and annually.

Additional technical levels

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