AUD/USD drops to multi-month lows near 0.6860 as greenback continues to outperform
|- The AUD/USD pair loses more than 100 pips for the week.
- Today's upbeat data releases from the U.S. help the greenback gather strength.
- US Dollar Index rises above 97.50 on weakening expectations of a Fed rate cut.
The AUD/USD pair extended its weekly slide on Friday and slumped to its lowest level since the flash crash witnessed on January second at 0.6862. With the trading action turning subdued in the last hour, the pair started to consolidate its losses and was last seen at 0.6866, where it was down 0.67% on a daily basis. For the week, the pair looks to erase more than 100 pips after starting near the 0.70 mark.
Today's data from the U.S. revealed that industrial production in May expanded by 0.4% following April's 0.4% contraction. Moreover, retail sales in the same period expanded by 0.5% to hurt the prospects of the Fed making a dovish shift in its forward guidance and hint at a rate cut next week. Supported by the upbeat data, the US Dollar Index, which tracks the dollar's value against a basket of six major currencies, gained traction and rose to its highest level since June 3 at 97.58. As of writing, the index was up 0.55% on the day at 97.55.
Assessing the impact of today's data on the Fed's decisions, "This morning’s consensus-topping reports on retail and industrial production suggest the U.S. economy remains in good shape," noted National Bank of Canada analyst Krishen Rangasamy. "If economic data remains strong over the next few months, the Fed may feel more comfortable that inflation expectations and hence inflation will bounce back."
On the other hand, this week's disappointing employment data from Australia and the lack of positive developments surrounding the U.S.-China trade conflict made it even more difficult for the AUD to find demand.
Technical levels to watch for
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