- AUD/USD holds lower grounds at weekly bottom after posting the biggest daily loss in a week.
- Risk appetite weakens after chatters that US Treasury requested agencies to delay payment while policymakers appear less optimistic of late.
- Fed Minutes, US default talks will be the key catalysts to watch for clear directions.
AUD/USD remains pressured around 0.6600 as market sentiment worsens on early Wednesday in Asia, amid fears of the US default, as well as hawkish Federal Reserve (Fed) concerns ahead of the Fed Minutes. Also challenging the Aussie pair is the mixed prints of Aussie data versus comparatively stronger US PMIs. However, hopes that the US policymakers will be able to avoid US default seem to put a floor under the Aussie pair prices.
Recently, US House Speaker Kevin McCarthy crossed wires, via Reuters, while suggesting no deal on the debt ceiling extension today but before June 01. Previously, Washington rolled out news stating the US Treasury has asked multiple agencies if they can delay the payment demands.
Elsewhere, the preliminary figures of the May monthly PMIs suggest that the US Services sector keeps outgrowing the manufacturing ones and fuelled the Composite PMI figure to the highest levels in a year. On the contrary, the Aussie activity numbers for the said month were less impressive. The same joins the latest divergence in the market’s bets on the Federal Reserve (Fed) versus the Reserve Bank of Australia (RBA) to exert downside pressure on the AUD/USD prices.
Apart from the US default fears and Fed concerns, the US-China tussles are also luring the Aussie pair bears, due to the Australia-China ties. Recently, Russia flaunts its ties with Beijing and that strengthens the global dislike for the dragon nation. Additionally, the US-China trade tussle continues, becoming an additional reason supporting the risk-off mood.
Amid these plays, Wall Street closed in the red and helped the US Dollar despite downbeat yields.
Moving on, there are no major data/events from Australia but the Reserve Bank of New Zealand’s (RBNZ) Monetary Policy Meeting and risk catalysts can entertain the risk-barometer pair during the early part of the day. Following that, the latest Federal Open Market Committee (FOMC) Meeting Minutes will be crucial to watch.
Technical analysis
A daily closing below one-month-old previous support, now resistance around 0.6625, directs AUD/USD towards the yearly low of around 0.6575.
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. The author will not be held responsible for information that is found at the end of links posted on this page.
If not otherwise explicitly mentioned in the body of the article, at the time of writing, the author has no position in any stock mentioned in this article and no business relationship with any company mentioned. The author has not received compensation for writing this article, other than from FXStreet.
FXStreet and the author do not provide personalized recommendations. The author makes no representations as to the accuracy, completeness, or suitability of this information. FXStreet and the author will not be liable for any errors, omissions or any losses, injuries or damages arising from this information and its display or use. Errors and omissions excepted.
The author and FXStreet are not registered investment advisors and nothing in this article is intended to be investment advice.
Recommended content
Editors’ Picks
AUD/USD bounces to 0.6450, shrugs off mixed Australian jobs data
AUD/USD is rebounding to test 0.6450 amid renewed US Dollar weakness in the Asian session on Thursday. The pair reverses mixed Australian employment data-led minor losses, as risk sentiment recovers.
USD/JPY drops to test 154.00 on Japan's intervention warnings
USD/JPY extends losses to test 154.00 in Asian trading on Thursday. The pair is undermined by the latest US Dollar pullback, Japan's FX intervention risks and a softer risk tone. Focus shifts to more Fedspeak and US data.
Gold price finds buyers again near $2,355 as USD licks its wounds
Gold price is attempting a tepid bounce in the Asian session, having found fresh demand near $2,355 once again. Gold price capitalizes on a softer risk tone and an extended weakness in the US Treasury bond yields, despite the recent hawkish Fed commentary.
Manta Network price braces for volatility as $44 million worth of MANTA is due to flood markets
Manta Network price was not spared from the broader market crash instigated by a weakness in the Bitcoin market. While analysts call a bottoming out in the BTC price, the Web3 modular ecosystem token could suffer further impact.
Investors hunkering down
Amidst a relentless cautionary deluge of commentary from global financial leaders gathered at the International Monetary Fund and World Bank Spring meetings in Washington, investors appear to be taking a hiatus after witnessing significant market movements in recent weeks.