- The Australian Dollar is on the defensive due to mixed sentiment.
- Federal Reserve: US growth risks are skewed to the downside, capping the US Dollar gains.
- Next week: RBA and Fed officials’ speeches will give direction to the AUD/USD.
The Australian Dollar (AUD) losses ground vs. the US Dollar (USD) amid a mixed sentiment, with US equities wavering due to Federal Reserve (Fed) officials moderating the increase of borrowing costs,. At the same time, China’s Covid-19 cases breaking the 30K threshold keep investors on their toes. Also, after observing the Thanksgiving holiday in the United States (US), thin liquidity conditions exaggerate market movements. Therefore, the AUD/USD is trading at 0.6743, below its opening price by 0.28%.
Mixed sentiment keeps the AUD on the defensive
European and US equities are fluctuating. The lack of a fundamentals catalyst around the AUD/USD pair keeps traders digesting the Federal Reserve’s last meeting minutes. Policymakers judging that “slowing in the pace of increase would likely soon be appropriate” sparked a rally in risk-perceived assets that lasted until the day before US Thanksgiving. The US Dollar is staging a recovery against most G8 currencies, as shown by the US Dollar Index (DXY) gaining 0.57% at 106.238.
Delving into the minutes, Fed officials commented that growth risks in the United States are skewed to the downside. Therefore, Thursday’s US S&P Global PMIs for October flashed signs that the US economy is slowing down as the indices tapped into contractionary territory, a tailwind for the Australian Dollar, with the AUD/USD reaching a weekly high of 0.6780.
Nevertheless, the sentiment is fragile, as China’s Covid-19 cases broke the 30,000 threshold. According to Bloomberg, “Almost every district is seeing targeted lockdowns,” and residents have been asked not to leave Beijing unless necessary. That said, traders moved into safety, with flows exiting high-beta currencies like the AUD, flowing towards the safe-haven status of the greenback.
What to watch
Ahead in the economic calendar, Australia’s docket for the next week will feature speeches by the Reserve Bank of Australia (RBA) Governor Philip Lowe and Governor Kearns. Data-wise, Building Permits, Manufacturing PMIs, and Retail Sales would shed direction on the Australian economy.
On the US front, the US front, Fed speaking would dominate the headlines. On the side of the economic indicator, the Federal Reserve’s favorite gauge of inflation, the PCE, PMIs, and labor market data, would entertain AUD/USD traders.
AUD/USD Key Technical Levels
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 rises toward 1.0850 as USD struggles to recover
EUR/USD has regained its traction and rose to the 1.0850 area after having retreated toward 1.0800 earlier in the session. The US Dollar struggles to stage a decisive rebound despite upbeat consumer confidence data from the US, allowing the pair to continue to push higher.
GBP/USD advances to fresh daily highs near 1.2350
Following a correction to the 1.2300 area, GBP/USD reversed its direction and advanced toward 1.2350. Although Wall Street's main indexes are trading mixed on Tuesday, the US Dollar stays on the back foot and helps the pair gather bullish momentum.
Gold: XAU/USD grinds north above $1,950 Premium
Spot gold trades near a daily high of $1,970.03 a troy ounce, as broad US Dollar weakness helped the metal recover some ground. XAU/USD trimmed half of its Monday’s losses, although a better market mood subdued demand for the bright metal.
Ethereum (ETH) options traders turn bearish ahead of the token unlock
Ethereum is holding steady above the $1,700 level despite slight bearish sentiment among options traders. Analysts have noted a rise in open interest in Ethereum, as co-founder Lubin assures that the altcoin is not a security.
S&P 500: With banking crisis in rear view, market pushes index closer to 4,000
The S&P 500 on Monday moved ahead cautiously without much fanfare after the US government agreed to sell $72 billion worth of Silicon Valley Bank assets to First Citizens Bank (FCNCA).