AUD/USD drops below 0.7700 as USD capitalizes on safe-haven flows
- AUD/USD continues to push lower in the American session.
- Major equity indexes in the US suffer heavy losses on Tuesday.
- Focus shifts to mid-tier data releases from Australia.
The AUD/USD pair came under renewed bearish pressure in the early trading hours of the American session and dropped to its lowest level since April 14 at 0.7675. As of writing, the pair was trading near 0.7700, losing 0.7% on a daily basis.
USD valuation continues to impact AUD/USD's movements
In the second half of the day, the greenback continued to gather strength against its rivals supported safe-haven flows. Wall Street's main indexes opened deep in the negative territory and allowed US Dollar Index (DXY) to extend its daily rebound. At the moment, the S&P 500 Index is losing 1.1% on the day and the DXY is up 0.32% at 91.25.
The data from the US showed that the IBD/TIPP Economic Optimism Index edged lower to 54.4 in May from 56.4 in April. Additionally, Factory Orders rose by 1.1% in March, falling short of analysts' estimate for an increase of 1.3%. Nevertheless, these figures failed to trigger a meaningful market reaction.
On Wednesday, the Commonwealth Bank's Manufacturing and Services PMI reports will be looked upon for fresh impetus. Additionally, March Building Permits data will be featured in the Australian economic docket as well.
Earlier in the day, the Reserve Bank of Australia (RBA) left its policy rate and bond-buying program unchanged as expected. In its Rate Statement, "at the July meeting, the board will also consider future bond purchases following the completion of the second $100 billion of purchases," the RBA noted and made it difficult for AUD to find demand.
Technical levels to watch for
Author
Eren Sengezer
FXStreet
As an economist at heart, Eren Sengezer specializes in the assessment of the short-term and long-term impacts of macroeconomic data, central bank policies and political developments on financial assets.
