AUD/USD registers miniscule losses after Moody’s downgrade of China
|AUD/USD shed 20 odd pips to a session low of 0.7455 after news hit the wires that ratings agency Moody’s has downgraded China’s long-term local currency and foreign currency issuer ratings to A1 from Aa3 and changed the outlook to Stable from Negative.
The pair retreated from the previous day’s high of 0.7517 on the broad based USD recover. Marc Chandler, Head of Global Markets Strategy, Brown Brothers Harriman says, “the downside momentum in the US dollar faded it could be an early sign that the market has discounted the recent news stream, which includes the fear that the political turmoil in the Washington will adversely impact the President's economic program.”
The USD also regained bid tone as the focus shifted to the June Fed rate hike odds, which as per Bloomberg calculations stand at 95%. The CME model puts the rate hike odds at 83%.
The focus today is on the Fed minutes, which are widely expected to reinforce the market’s expectations for June tightening.
AUD/USD Technical Levels
Tuesday’s Doji candle indicates the recovery from the low of 0.7328 may have topped out. A break below 0.7435 (trend line support) would expose 0.74 (zero levels) and 0.7367 (May 5 low). On the higher side, breach of resistance at 0.7473 (Apr 12 low) would open up upside towards 0.7519 (previous day’s high) and 0.7558 (May 2 high).
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