AUD/USD delivers strong recovery from 0.6500 on subdued US Dollar
- AUD/USD recovers vertically from 0.6490 as the US Dollar turns subdued.
- The market participants hope that the Fed will announce a rate cut in June.
- Upbeat Caixin Manufacturing PMI improves the appeal of the Australian Dollar.
The AUD/USD pair delivers a V-shape recovery from 0.6490 as investors hope the Federal Reserve (Fed) will start reducing interest rates from the June policy meeting. The Aussie asset recovers sharply as the US Dollar comes under pressure.
There is a mixed action in the global market as S&P 500 futures are down in the European session while risk-perceived currencies are performing better against the US Dollar. The US Dollar Index, which measures the US Dollar’s value against six rival currencies, falls slightly to 104.00.
Market expectations for rate cuts by the Fed in the June meeting remain firm as the annual core inflation data grew at the slowest pace of 2.8% in their years. However, the Federal Reserve (Fed) is still not ready to unwind the restrictive policy stance sooner as they need more confidence that inflation will return to the 2% target.
Fed policymakers want to analyze more data to confirm whether January’s high inflation data was a one-time blip or price pressures are flaring up again.
Going forward, market participants will look to the United States Manufacturing PMI data for February, which will be published at 15:00 GMT.
Meanwhile, the Australian Dollar performs stronger on February's upbeat Caixin Manufacturing PMI. Surprisingly, the economic data rose to 50.9 from expectations of 50.6 and the prior reading of 50.8. The Australian economy is China's leading trading partner, and an improvement in the latter's economic prospects eventually strengthens the Australian Dollar's appeal.
Author
Sagar Dua
FXStreet
Sagar Dua is associated with the financial markets from his college days. Along with pursuing post-graduation in Commerce in 2014, he started his markets training with chart analysis.
