AUD/USD drifts back closer to yesterday’s 3-1/2 month lows
|The AUD/USD pair failed to build on early recovery move and has now slipped into negative territory for the fourth consecutive session.
Spot ran through fresh offers during early NA session and moved back within striking distance of 3-1/2 month lows touched in the previous session. The pair latest leg of downslide could be attributed to a fresh wave of up-surge in the US treasury bond yields, which tends to underpin the greenback demand and drive flows away from higher-yielding currencies - like the Aussie.
Despite of the disappointing headline Q1 US GDP number, showing a dismal growth of 0.7% annualized growth, GDP Price Index and Employment Cost Index both pointed to prevailing inflationary pressures in the economy. Higher inflation expectations revived hopes for additional Fed rate-hike move through 2017 and helped the key US Dollar index to bounce of multi-month lows touched earlier during the day.
Apart from the advance GDP print, the US economic docket also features the release of Chicago PMI and Revised UoM Consumer Sentiment, which would now be looked upon for some fresh trading impetus.
Technical levels to watch
Jim Langlands, Principal at FX Charts writes, “the dailies still look pretty neutral so cautious stance is required but the 4 hour momentum indicators are pointing lower, so a retest of 0.7440 seems possible, below which would then find only minor support until we reach 0.7385. On the topside, the initial resistance will be seen at Thursday’s high (0.7491) and then again at 0.7510 and 0.7525.”
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