AUD/USD bears on the prowl on firm US Dollar

AUD/USD is down by over 0.6%, losing territory from a high of 0.6767 and printing a fresh low of 0.6650.  The US Dollar firmed on Thursday but as measured by the DXY index vs. a basket of currencies, it has so far failed to meaningfully recoup the 3.8% slump that followed Tuesday's Bank of Japan (BoJ) news. Nevertheless, US data has supported the hawkish sentiment surrounding the Federal Reserve (Fed).

The DX  rallied into the 104.50s from a low of 103.75. The US Dollar, however, remains well below the highs for the month near 107.20 while US Treasury yields also edge up following the data on Thursday. The Department of Labor said Weekly Jobless Claims in the US rose less than expected. Seasonally adjusted numbers of initial Unemployment Claims rose by 2,000 to 216,000 in the week ended Dec. 17. The consensus on Econoday was for a 225,000 print. The previous week's level was revised up by 3,000 to 214,000. The four-week moving average tallied 221,750, sliding by 6,250 from the previous week's revised average of 228,000. Unadjusted claims declined by 4,064 on a weekly basis to 247,867.

Meanwhile, domestically, earlier in December, the Reserve Bank of Australia (RBA) raised its policy rate by 25 basis points to 3.1%, taking borrowing costs to a level not seen in a decade. The RBA said that it expects to tighten further to bring down inflation but analysts at Rabobank explained that a less aggressive RBA interest rate cycle from here combined with concerns that Chinese demand may be hampered by a surge in Covid-19 are risks to the outlook for the AUD.