- AUD/USD is hovering around 0.6440, ahead of 2022 lows hit around 0.6436.
- Fed’s Evans: Expects the Fed Funds Rate (FFR) to be around 4.50-4.75%.
- Fed’s Bullard: Recession Risks Increased But Attributed To External Shocks; expects the FFR to stand at 4.50% by the end of 2022.
The AUD/USD extends its losses during the day, with a decrease of 0.17%, rebounding from the historical lows of 0.6436, reached on Monday, while the markets calm down. Risk aversion triggered by the new UK government triggered a global bond sell-off, coupled with broad sterling weakness, which strengthened the dollar, a headwind for risk-sensitive currencies. At the time of writing, the AUD/USD is trading at 0.6442, below its opening price.
AUD/USD falls by a slim margin amid risk appetite sentiment
As the North American session progresses, US stocks are trading in the green. Fed officials, led by Chicago Fed President Charles Evans and St. Louis Fed President James Bullard, crossed paths on Tuesday.
Charles Evans said that the Fed should raise rates to the range of 4.50-4.75%, more aggressive than previously thought, which further cements the central bank’s commitment to curb inflation. He doesn’t see a “recession-like” scenario and echoed comments from Boston’s Collins that the unemployment rate should rise to ease inflationary pressures.
Lately, St. Louis Fed President James Bullard said they have “a serious inflation problem in the US,” while adding that the risks of a recession had increased, but said it could be caused by external factors, such as Europe and China, dragging the world into a slowdown. He added that raising rates to around 4.5% by the end of the year would slow the economy and tame inflation.
As for the data, the US economic docket included August Durable Goods Orders, which fell 0.2% mom, less than the estimated 0.3% contraction. Later, US Central Bank Consumer Confidence rose in September for the second month in a row, standing at 108 vs. estimates of 104.6.
Lyn Franco, Senior Director of Economic Indicators at the Conference Board, stated: “Consumer confidence improved in September for the second month in a row, supported in particular by employment, wages and lower gas prices,” adding: “Meanwhile, purchase intentions were mixed, with consumer intentions rising for cars and consumer appliances, while home purchase intentions fell.”
At the same time, the US Census Bureau reported that August new home sales unexpectedly rose by 0.685 million, above estimates of 0.5 million. Sources quoted by Bloomberg said: “The housing market has felt the biggest hit from rising borrowing costs, so while it welcomes an increase in sales, we know the overall picture shows slowing activity. .”
AUD/USD Key Technical Levels
Source: Fx Street
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