- AUD/USD jumps to a 1.5-month high on Monday amid a sustained selling bias around the USD.
- Diminishing odds of a more aggressive Fed rate hike continue to weigh on the dollar.
- Recession fears weigh on investor sentiment and could help limit dollar losses.
- Investors are now turning to Tuesday’s RBA and this week’s key US macro releases for further momentum.
The pair AUD/USD extends its intraday rise during the first half of the European session on Monday and jumps to a 1.5 month high, around the 0.7035 areain the last hour.
US Dollar Extends Post-FOMC Losses and is moving lower for the fourth consecutive day, which turns out to be a key factor pushing the AUD/USD pair higher. In fact, the dollar index falls to its lowest level since July 5 amid the Declining odds of a more aggressive tightening of monetary policy by the Federal Reserve. On the background of a less harsh FOMC decision last week, the US second quarter GDP report released on Thursday confirmed a technical recession. This, in turn, fueled speculation that the Fed would take a more gradual approach to raising interest rates, which continues to weigh on the dollar.
Meanwhile, the risk of a global economic downturn resurfaces after the disappointing release of China’s official manufacturing PMI over the weekend. This seems to have dampened investors’ appetite for riskier assets, which is evident from the weaker tone in equity markets. The flow of risk aversion, coupled with a nice bounce in US Treasury yields, could limit losses for the safe-haven dollar and cap the risk-sensitive AUD.. Investors may also refrain from opening aggressive positions ahead of this week’s key RBA event and important US macro data.
A fairly busy week begins with the release of the US Manufacturing PMI later at the start of the American session today. The data could give the AUD/USD pair some lift ahead of the Reserve Bank of Australia’s policy decision to be announced during the Asian session on Tuesday. Meanwhile, attention will turn to the monthly report on US employment, popularly known as the NFP, due out on Friday. This would play a key role in influencing the USD price dynamics and help determine the next directional move for the AUD/USD pair.
AUD/USD technical levels
Source: Fx Street
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