- AUD/USD has found an intermediate cushion around 0.7050, however, more downside is on cards.
- Investors have turned risk-averse ahead of the release of the interest rate policy by the Fed.
- A decline in monthly Australian Retail Sales might ease some troubles for the RBA.
The AUD/USD pair has managed to gauge an intermediate cushion around 0.7050 in the early Asian session. The Aussie asset has witnessed immense selling pressure and is showing a less-confident pullback move, however, the downside is still favored as the risk profile is still negative. Federal Reserve (Fed)’s monetary policy-inspired volatility has forced investors to dump risk-perceived assets vigorously.
S&P500 tumbled on Monday as investors are worried that further interest rate hikes by Fed chair Jerome Powell will escalate recession fears. Consumer spending will get trimmed, employment opportunities will get limited and producers might operate on the lower capacity to augment higher interest rates by the Fed. The US Dollar Index (DXY) delivered a breakout above the critical resistance of 101.80 and drove to near 101.90 as investors underpinned the risk aversion theme. Also, the return generated by 10-year US Treasury bonds scaled above 3.54%.
The Fed is highly likely to announce a hike in interest rates by 25 basis points (bps) to 4.50-4.75% as a significant decline in the Consumer Price Index (CPI) has infused confidence among Fed policymakers that the roadmap of achieving price stability in demonstrating desired results. Also, the street is expecting that the Fed might pause hiking interest rates after pushing them to 4.75-5.00% for the remaining year.
On the Australian front, investors are keeping an eye on Tuesday’s monthly retail sales data, which is expected to display de-growth of 0.3% from the prior release of 1.4%. This might ease some troubles for the Reserve Bank of Australia (RBA), which is struggling the cap the stubborn inflation in the Australian economy.
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
AUD/USD tumbles to breach 0.6500 as poor China's PMI offsets upbeat Aussie data
AUD/USD is seeing intense selling pressure and breaches 0.6500 after the Chinese NBS Manufacturing PMI sank further into contraction in May. Investors shrugged off hot Australian inflation data and strong Construction Work figures amid resurfacing China economic worries.
EUR/USD battles 1.0700 as China worries lift the US Dollar
EUR/USD is testing 1.0700, retreating from near the 1.0740 region in Wednesday's Asian trading. Dismal China's NBS Manufacturing PMI and pre-US debt deal vote anxiety reinstate the US Dollar's safe-haven appeal. US/ German data, Fedspeak and House vote in focus.
Gold: Bear Cross confirmation to threaten 100 DMA support again Premium
Gold price is fading the previous rebound above the $1,950 mark, as the United States Dollar (USD) is seeing a fresh uptick amid a risk-on market profile. Attention now turns toward the House of Representatives vote on the US debt deal.
New SHIB investors bring deposits to the network but fail to trigger a rise in Shiba Inu price
Shiba Inu price is still facing consolidation after nearly a month of no major gains, and it seems like this might be the case for a while. Even though the network is observing bullish interest from new investors, the lack of bullishness from existing SHIB holders might act as a barrier to recovery.
Debt ceiling deal keeps dollar locked in devaluation spiral
Fiscal hawks weren't optimistic when Kevin McCarthy was elected Speaker of the U.S. House. The California Republican's track record was dismal when it comes to spending restraint. Nearly 5 months into his term, it is now apparent McCarthy has no intention of holding the line against government expansion.