- A combination of factors causes some selling around the AUD/USD on Tuesday.
- Global growth concerns weigh on the risk-sensitive Aussie amid a stronger USD.
- The pair’s move lower remains supported ahead of this week’s important macroeconomic releases.
The pair AUD/USD has captured some buying at the 0.7160 zone on Tuesday and has recovered some of the Asian session’s decline to close in on nearly four-week highs hit earlier in the day at 0.7203. At time of writing, the pair is trading at 0.7184, down -0.17% on the day.
Hopes that China’s easing of COVID-19 restrictions will boost the global economy have overshadowed China’s latest official PMIs, which showed contraction in both the manufacturing and services sectors.. Optimism was reflected in a nice intraday rebound in US stock index futures, which in turn was seen as a key factor giving some support to the risk-sensitive Aussie.
The Australian dollar was also seen supported by the aggressive signal from the Reserve Bank of Australia that a further hike in interest rates is still possible in June, amid upside risks to inflation. However, the revival of demand around the US dollar prevented investors from opening aggressively bullish positions on the AUD/USD pair and limited any significant rally in the pair, at least for now.
The US dollar recovered strongly from one-month lows hit on Monday, amid a sharp rebound in US Treasury yields, bolstered by hawkish comments from Federal Reserve Governor Christopher Waller. At an event held in Frankfurt, Waller was in favor of a rate hike of 50 basis points over several meetings until inflation approaches the target again of the central bank.
Investors were also reluctant, preferring to wait on the sidelines ahead of this week’s major macroeconomic releases, starting with the Conference Board’s US consumer confidence index on Tuesday. Next, attention will turn to the quarterly Australian GDP report and the US manufacturing PMI on Wednesday. Later in the week, the US ADP and NFP Monthly Employment Reports will be released on Thursday and Friday, respectively.
AUD/USD technical levels
Source: Fx Street
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