AUD/USD bulls are moving in during Powell's presser

Following an initial sell-off in AUD/USD over the Federal Reserve interest rate decision and statement, the bulls are moving in as the greenback gives back a significant portion of its rally. At the time of writing, AUD/USD is trading at 0.7250 up some 0.78% on the day and has travelled between a low of 0.7180 and 0.7274. 

AUD/USD is trading in lockstep with US stocks which have started to recover the initial sell-off as the Federal Reserve Jerome Powell states that each meeting is a live meeting, but it will depend on inflation and economic data. He has stated that the Fed is looking for the month on month inflation to come down, pouring dovish water on what was a more hawkish statement. 

Hawkish Fed statement

Meanwhile, the Fed statement noted that the Ukraine war could lead to higher inflation and slower Gross Domestic Product. It also stated that most Fed officials see as many as seven rate increases in 2022. Additionally, the Fed’s dot plot is pencilling in rate hikes at every remaining meeting this year. 

RBA and jobs in focus

Meanwhile, in his speech last week, the Reserve Bank of Australia's Governor Phillip Lowe remarked about inflation risks to all advanced economies. As for the RBA minutes for March, they did not represent any major shift in its rhetoric, though the Board did admit that the wage outlook risks were “skewed to the upside” and that firms were “increasingly prepared to pass on higher costs”. 

As for key data in the immediate future, the focus is now on the Aussie labour market. ''We anticipate a strong labour market print for Jan as economic activity continues to pick up amid loose restrictions and robust labour demand,'' analysts at Td Securities said. 

''We forecast 50k for the headline and for the participation rate to edge higher to 66.4% which brings the unemployment rate to 4.1%, levels last seen since Mar 2008. We also see a rebound in hours worked after the 8.8% m/m decline in Jan.''