- AUD on the bid as US dollar pulls back from CPI knee-jerk as Fed Powell pours cold water.
- AUD/USD bears in charge on the weekly chart.
AUD/USD is trading back on the bid on Wednesday, climbing 0.45% at the time of writing, following Federal Reserve's chairman's dovish rhetoric.
AUD/USD climbed from a low of 0.7430 to a high of 0.7485, supported as Jerome Powell said in remarks prepared for Congress that the economy was "still a ways off" from levels the central bank wanted to see before tapering its monetary support.
His remarks followed a stronger than expected Consumer Price Index print that saw the USD gain the prior day, while broadly weaker risk appetite posed a challenge for the Aussie.
June CPI came in much higher than expected, with headline rising 5.4% YoY vs. 4.9% expected and 5.0% in May and core rising 4.5% YoY vs. 4.0% expected and 3.8% in May.
The impact on US yields was compelling with the 10-year rising to 1.41% and 1.4230% today. This was the highest since July 6.
The data was the fourth month of upside inflation surprises. The transitory argument was getting harder and harder to sustain.
However, the benchmark has since levelled out to 1.3630 the low today following Powell's comments which have helped to temper the prospects of a faster pace of hikes from the Fed.
''We think more and more on the FOMC are gravitating towards this stance. Tapering to us is taking the foot off the gas while hiking rates is tapping on the brakes, and there is a big difference between the two,'' analysts at Brown Brothers Harriman explained.
The analysts are expecting something ''more definitive at either the August Jackson Hole Symposium or the September 21-22 FOMC meeting if the US data continue to run hot.''
Overall, risks for the AUD/USD remain balanced between US yields, offshore equities and the Aussie jobs data for June coming up.
AUD/USD technical analysis
The focus is on the downside from a longer-term chart technical point of perspective as follows:
The weekly chart above illustrates that the price is been testing the environment below the early June lows and prior support structure.
Bears still have a number of days before the week is out for a lower weekly close this week.
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
EUR/USD clings to daily gains above 1.0650
EUR/USD gained traction and turned positive on the day above 1.0650. The improvement seen in risk mood following the earlier flight to safety weighs on the US Dollar ahead of the weekend and helps the pair push higher.
GBP/USD recovers toward 1.2450 after UK Retail Sales data
GBP/USD reversed its direction and advanced to the 1.2450 area after touching a fresh multi-month low below 1.2400 in the Asian session. The positive shift seen in risk mood on easing fears over a deepening Iran-Israel conflict supports the pair.
Gold holds steady at around $2,380 following earlier spike
Gold stabilized near $2,380 after spiking above $2,400 with the immediate reaction to reports of Israel striking Iran. Meanwhile, the pullback seen in the US Treasury bond yields helps XAU/USD hold its ground.
Bitcoin Weekly Forecast: BTC post-halving rally could be partially priced in Premium
Bitcoin price shows no signs of directional bias while it holds above $60,000. The fourth BTC halving is partially priced in, according to Deutsche Bank’s research.
Week ahead – US GDP and BoJ decision on top of next week’s agenda
US GDP, core PCE and PMIs the next tests for the Dollar. Investors await BoJ for guidance about next rate hike. EU and UK PMIs, as well as Australian CPIs also on tap.