AUD/USD drops toward daily lows around 0.7200 as risk-sentiment sours

AUD/USD remains poised to close the week on a lower note.
The US Dollar Index gains strength in the European session and stands strong above 94.30.
Higher Inflation risk, central bank’s hawkish tone exerts pressure on the riskier asset, US data eyed.

Rekha Chauhan Independent Analyst

AUD/USD surrenders all the early gains in the European session on Friday. The pair opened higher but failed to preserve the strength and continued with the previous day’s sell-off. At the time of writing, AUD/USD is trading at 0.7206, down 0.26% for the day.

The US Dollar Index (DXY), which tracks the performance of the greenback against its six major rivals, pushes higher in the afternoon trade and is on the path for its best weekly gains since June. Investors digested a combination of factors of slowing global growth, less accommodative monetary policy, China headwinds and supply-chain bottlenecks weighing on traders' sentiments. It is worth noting that the S&P 500 Futures are trading at 4,276, down 0.49% for the day.

On the other hand, the aussie lost its momentum after the factory activity in Australia weakened in September while stagnation in Asia, including the second biggest economy China. Furthermore, the risk sentiment was dented by the resignation of New South Wales Premier over a corruption probe amid the COVID-19 outbreak in the country.

As for now, traders await the US ISM Purchasing Managers Index (PPI) data to gauge the market sentiment.

AUD/USD additioanl levels

Author

Rekha Chauhan

Independent Analyst

Rekha Chauhan has been working as a content writer and research analyst in the forex and equity market domain for over two years.

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