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AUD / USD recovers initial losses and rises above the 0.7100 level

The pair AUD/USD has recovered initial losses to the region of 0.7085 and rises back above the 0.7100 level at the start of the European session on Thursday. At the time of writing, the pair is practically unchanged on the day around the 0.7115 level.

A combination of negative factors has not helped the pair to capitalize on the previous day’s recovery move to weekly highs, meeting new sales during the Asian session on Thursday. Global risk sentiment has been affected by slow progress in stimulus talks in the United States. This, in turn, helped reignite demand for the safe-haven US dollar and put some pressure on the AUD, the highest perceived risk currency.

Investors remain skeptical that any tax package could pass through the Republican-controlled Senate before the November 3 election. In addition, US President Donald Trump accused Democrats on Wednesday of being unwilling to reach an acceptable compromise on the stimulus. Additionally, there remains strong opposition within Trump’s own Republican Party over a larger stimulus bill.

Apart of this, Expectations that the RBA will cut interest rates in November have put additional downward pressure on the Australian dollar and have further contributed to a softer tone around the AUD / USD pair. However, the fall has been limited, at least for the time being, as attention remains on progress toward passing additional fiscal stimulus measures in the US.

Market participants now await the release of initial weekly US jobless claims. Data, along with broader market risk sentiment and US stimulus news, will influence the dynamics of USD prices and could generate some short-term trading opportunities.

Credits: Forex Street

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