AUD/USD: greenback beaten up on dovish Fed officials and less hawkish FOMC minutes

Currently, AUD/USD is trading at 0.7796, up 0.23% on the day, having posted a daily high at 0.7811 and low at 0.7771.

FOMC Minutes: Many Fed officials saw another rate hike warranted this year

AUD/USD has completed the recovery to the 0.78 handle although is capped by the 50 4-hour SMA at 0.7802 after an initial test that failed to break above it. The FOMC minutes were the culprit as being less hawkish this time around, with minutes noting the concern that some officials have for the "period" of low inflation not just being transitory.

Elsewhere, the US 10yr treasury yields fell from 2.36% to 2.33% on the back of a slightly dovish Fed Evans but then rebounded to 2.35% around the time of the FOMC minutes. 

The Fed fund futures yields continued to price the chance of a December rate hike at 87%.

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Analysts at Westpac suggest that there will be further consolidation between 0.7750 and 0.7810, following a 5% fall over the past month and the recent stall in the USD.

AUD/USD 1-3 month: 

Further out, the analysts figure that should the RBA remain firmly on hold, as they expect, and the US dollar rises on the delivery of a Fed interest rate rise in December, then AUD/USD could fall to 0.76 by year-end. 

AUD/USD levels

The 50 4hr SMA and around the 23.6% of 0.8105 (Sept 20 top) to 0.7733 is the resistance that bulls need to crack for a further leg up to the accelerated downtrend and 0.7875, the 4th October high. To the downside, a break of 0.7733 opens risk to 0.7710 as the 30th June peak. There is scope for  0.7684 on continued supply as being the previous 2016-2017 resistance line.