AUD/USD bears back in control below the 0.69 figure
|- AUD/USD pressured on the strength in the greenback.
- Investors weigh the rhetoric of the Fed's chair, Powell.
At 0.6880, AUD/USD is under pressure into the final moments pre rollover and is down some 0.37%. The bears were in town despite the prior day's positive Retail Sales. Instead, markets were driven by comments from the Federal Reserve's Chairman, Jerome Powell. He explained that there is a risk the US central bank's interest rate hikes will slow the economy too much. the central banker added that the bigger risk, however, is persistent inflation.
Powell made these comments at a European Central Bank conference. The dollar index (DXY), which measures the greenback against six counterparts, rallied to a high of 105.149 from a low of 104.356 as investors sought safety in US assets as stocks declined globally due to the mounting risk of a recession.
Meanwhile, the Aussie had otherwise found some support on Wednesday as upbeat domestic data provided a temporary distraction from worries about a global recession. reuters reported that Australian Retail Sales surprised with a strong increase of 0.9% in May handily topping forecasts of a 0.4% gain. The news agency reported that Sales were up a sizable 10.4% on May last year, though some of that is due to higher prices rather than volumes.
The fresh insight into the consumer has encouraged demand for the local currency due to the expectations that the Reserve Bank of Australia (RBA) will have more confidence that consumers can handle higher interest rates as it prepares for another likely hike at its July policy meeting next week. RBA Governor Philip Lowe has previously suggested that drastic tightening would seriously damage the economy. Rates are seen up around 3.25% by the end of the year and near 4% in 2023 and investors are odds-on for another rise of 50 basis points to 1.35%, and for a similar move in August.
For the day ahead, both the Manufacturing Purchasing Managers Index (PMI) and the official Non-Manufacturing PMI are released for China.
Information on these pages contains forward-looking statements that involve risks and uncertainties. Markets and instruments profiled on this page are for informational purposes only and should not in any way come across as a recommendation to buy or sell in these assets. You should do your own thorough research before making any investment decisions. FXStreet does not in any way guarantee that this information is free from mistakes, errors, or material misstatements. It also does not guarantee that this information is of a timely nature. Investing in Open Markets involves a great deal of risk, including the loss of all or a portion of your investment, as well as emotional distress. All risks, losses and costs associated with investing, including total loss of principal, are your responsibility. The views and opinions expressed in this article are those of the authors and do not necessarily reflect the official policy or position of FXStreet nor its advertisers.