- A combination of factors lifts AUD/USD to a fresh three-week high on Thursday.
- Reviving expectations for a more aggressive rate hike by the RBA underpins the Aussie.
- Expectations of a less aggressive Fed weigh on the dollar and continue to offer support to the pair.
The pair AUD/USD attracts some buying near the 0.6470 area on Thursday and hits a fresh three-week high at the start of the European session at 0.6520. At time of writing, the pair is giving back early gains, although it remains well supported by a combination of factors.
The Australian dollar is underpinned by expectations of a more aggressive tightening of monetary policy by the Reserve Bank of Australia, reinforced by Wednesday’s consumer inflation figures. In fact, the Australian Bureau of Statistics reported that the Headline CPI rose 1.8% in the September quarter and the annual rate accelerated to 7.3%, the highest since 1990. Elsewhere, the US dollar is weakening near its lowest level since Sept. 20, offering additional support to the AUD/USD pair.
market participants they now expect the deteriorating outlook for the US economy to force the Federal Reserve to slow the pace of its rate-hike cycle. This is reinforced by the recent pullback in US Treasury yields and continues to weigh on the dollar. Apart from this, risk appetite further reduces the demand for the safe-haven dollar, benefiting the risk-sensitive Aussie. This, in turn, provides an additional boost to the AUD/USD pair, although the rally lacks bullish conviction.
Traders now seem reticent and may prefer to stay on the sidelines before the report on the US Third Quarter GDP, which will be published later at the beginning of the American session. Durable Goods Orders and the usual weekly initial jobless claims will also be released on Thursday’s US economic docket. This, along with US bond yields, will weigh on the dollar and give the AUD/USD pair some momentum. Apart from this, the broader risk sentiment could help create some opportunities.
AUD/USD technical levels
Source: Fx Street
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