AUD/USD renews multi-day low near 0.6700 on mixed Australia Q2 GDP, focus on Fedspeak

• AUD/USD takes offer to refresh two-month low, ignores Aussie government efforts to tame inflation, firmer GDP.
• Australia’s Q2 GDP eased to 0.9% on QoQ, improved to 3.6% on YoY.
• Risk-aversion, hawkish Fed bets also exert downside pressure on the prices.
• China trade numbers, speeches from Fed policymakers eyed for fresh impulse.

AUD/USD extends the bearish bias towards attacking the 0.6700 threshold, declining to the fresh low since July 14, amid mixed Aussie data and risk-off mood during Wednesday’s Asian session. In doing so, the risk barometer pair ignores the Aussie government’s efforts to tame inflation-led economic hardships ahead of next month’s annual budget release.

Australia’s second quarter (Q2) Gross Domestic Product eased to 0.9% QoQ versus 1.0% expected and 0.8% prior. The YoY details suggest 3.6% growth compared to 3.5% market consensus and 3.3% in previous readings. Earlier in the day, Australia’s AiG Performance of Services Index rose past 51.7 prior to 53.3 in August.

That said, the Australian government plans to reduce the cost of medicines and help pensioners amid rising inflation. “In a bid to ease the pain on families and ahead of a federal budget next month, Prime Minister Anthony Albanese said the government will introduce legislation to lower the maximum co-payment to A$30 ($20) from A$42.50 per prescription on its pharmaceutical benefits scheme, helping 3.6 million people,” said Reuters. The news also stated that the government would offer financial incentives for pensioners that would make it cheaper to downsize homes, lessening the impact on pension money when they profit from a property sale.

Alternatively, amid the energy crisis and China’s covid woes, growing fears of economic slowdown join the firmer US data and hawkish Fed bets to fuel the US dollar. That said, the US Dollar Index (DXY) stays firmer around the highest levels in 20 years, up 0.22% intraday near 110.50 at the latest. Recently, the CME’s FedWatch Tool signals a 72.0% chance of 50 basis points (bps) Fed rate hike in September versus 57% one-day ago.

While portraying the mood, Wall Street closed in the red while the 10-year US Treasury yields jumped the most in a month to poke the highest levels since mid-June. It’s worth noting that the S&P 500 Futures dropped half a per cent while prices of the commodities like crude oil and gold remain pressured to portray the risk-aversion and weigh on the AUD/USD.

Looking forward, China’s trade numbers for August will precede the Fedspeak to direct short-term AUD/USD moves. However, significant attention will be given to Thursday’s speech from Reserve Bank of Australia’s (RBA) Governor Philip Lowe and Fed Chair Jerome Powell for clear directions.

Technical analysis

Unless crossing a one-week-old descending resistance line, around 0.6805 by the press time, AUD/USD remains vulnerable to a refreshing yearly low, currently near 0.6680.