AUD/USD extends recovery to near 0.6840 as investors digest hawkish Fed minutes


  • AUD/USD has extended its recovery to near 0.6840 as investors have started ignoring the hawkish Fed minutes' impact.
  • The upbeat market mood has resulted in a meaningful correction in the US Dollar Index to near 104.00.
  • A decline in the Australian labor cost index might not impact the decision of policy tightening continuation by the RBA.

The AUD/USD pair has stretched its recovery to near 0.6840 in the Asian session. The Aussie asset has picked strength as investors have shrugged-off volatility inspired by the release of the hawkish Federal Open Market Committee (FOMC) minutes released in the late New York session.

A sheer recovery has been observed in the S&P500 futures after a choppy Wednesday, portraying a stellar rebound by the risk-appetite theme. The upbeat market mood has resulted in a meaningful correction in the US Dollar Index (DXY). The USD Index has slipped firmly to near 104.00 despite the Federal Reserve (Fed) policymakers in a hurry to reach the interest rate peak to bring down the inflationary pressures.

Fed chair Jerome Powell and his mates are worried that the strong labor market and a recovery in consumer spending could trigger a revival in the United States Consumer Price Index (CPI). The FOMC minutes conveyed that two policymakers Cleveland Fed President Loretta Mester and St. Louis Fed President James Bullard were not in favor of decelerating the pace of hiking rates again. Investors should be aware that the Fed also trimmed the policy tightening pace in December monetary policy meeting to 50 basis points (bps) after hiking interest rates four times consecutively by 75 bps.

Meanwhile, the absence of meaningful easing signals in the Australian inflation is bolstering the case of policy tightening continuation by the Reserve Bank of Australia (RBA). On Wednesday, Australia’s Wage Price Index (Q4) was escalated by 0.8% lower than the consensus of 1.0% on a quarterly basis. This might have provided relief to the RBA as lower funds with households would result in lower spending.  However, more rate hikes cannot be paused as the current inflation is four times more than the desired target.

AUD/USD

Overview
Today last price 0.6831
Today Daily Change 0.0026
Today Daily Change % 0.38
Today daily open 0.6805
 
Trends
Daily SMA20 0.6965
Daily SMA50 0.689
Daily SMA100 0.6718
Daily SMA200 0.6804
 
Levels
Previous Daily High 0.6865
Previous Daily Low 0.6795
Previous Weekly High 0.703
Previous Weekly Low 0.6812
Previous Monthly High 0.7143
Previous Monthly Low 0.6688
Daily Fibonacci 38.2% 0.6822
Daily Fibonacci 61.8% 0.6838
Daily Pivot Point S1 0.6778
Daily Pivot Point S2 0.6752
Daily Pivot Point S3 0.6708
Daily Pivot Point R1 0.6848
Daily Pivot Point R2 0.6891
Daily Pivot Point R3 0.6918

 

 

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