- AUD/USD is under some selling pressure on Thursday amid resurgence in dollar demand.
- Falling US bond yields and risk appetite limit the value of the dollar, which is a safe haven.
- Bets on more aggressive rate hikes by the RBA could continue to support the pair.
The pair AUD/USD it is down almost 100 points from the three-week highs reached this Thursday, although the intraday decline finds some support near the 0.6425 area. The pair quickly recovers a few points during the early American session and is currently hovering around the 0.6475-0.6480 zone, down more than 0.30% on the day.
The US dollar makes a nice intraday rebound from its lowest level since September 20th and turns out to be a key factor putting downward pressure on the AUD/USD pair. The dollar maintains its bid tone after the US GDP report showed that the world’s largest economy expanded at an annualized rate of 2.6% during the third quarter, beating estimates of 2.4%. This represents a strong reversal of the 0.6% drop in the previous quarter and the 1.6% decline recorded in the first three months of the year.
However, this was partially offset by the fact that the GDP price index only rose 4.1%, well below the 5.3% forecast and more than half the previous quarter’s 9.0%. This could be seen as the first sign of easing in inflationary pressure, adding to speculation that the Fed will soften its hawkish stance. The expectations caused a further decline in US Treasury bond yields. This, coupled with the risk boost, limits the safe-haven dollar and offers some support to the risk-sensitive Aussie.
Furthermore, increasing bets in favor of a more aggressive tightening of monetary policy by the Reserve Bank of Australia, reinforced by Wednesday’s consumer inflation figures, should act as a tailwind for the AUD/USD pair. . Therefore, any significant pullback could be viewed as a buying opportunity and is more likely to be short lived. However, upside potential seems limited as attention turns to next week’s FOMC meeting.
Technical levels to watch
Source: Fx Street
With 6 years of experience, I bring to the table captivating and informative writing in the world news category. My expertise covers a range of industries, including tourism, technology, forex and stocks. From brief social media posts to in-depth articles, I am dedicated to creating compelling content for various platforms.
