- AUD/USD consolidates its recent recovery from multi-month lows.
- Dovish sounding remarks by RBA’s Lowe held bulls on the defensive.
- Sliding US bond yields capped the USD upside and helped limit losses.
The AUD/USD pair lacked any firm directional bias on Wednesday and remained confined in a narrow trading band, just below mid-0.6700s.
The pair struggled to capitalize on its two-day-old recovery move from multi-month lows seesawed between tepid gains/minor losses through the Asian session on Wednesday.
Traders preferred to stay on the sidelines
Comments by the RBA Governor Philip Lowe reinforced prospects for a further monetary policy easing and turned out to be one of the key factors that kept a lid on the upside.
In a speech in Sydney, Lowe said that the central bank would see a strong case for cutting rates if the unemployment rate moved higher and there was no progress in lifting inflation.
Lowe, however, downplayed the fears of a prolonged slowdown due to the outbreak of coronavirus and added that recent inflation, jobs data are gradually moving in the right direction.
This coupled with a mildly positive tone surrounding the US dollar, underpinned by upbeat US economic data published earlier this week, further collaborated towards capping gains.
The USD bulls, however, lacked any strong conviction amid a pullback in the US Treasury bond yields, which seemed to be the only factor lending some support to the major, at least for now.
Moving ahead, market participants now look forward to the US economic docket – highlighting the release of ADP report and ISM Non-Manufacturing PMI – for some short-term trading impetus.
Technical levels to watch
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 consolidates weekly gains above 1.1150
EUR/USD moves up and down in a narrow channel slightly above 1.1150 on Friday. In the absence of high-tier macroeconomic data releases, comments from central bank officials and the risk mood could drive the pair's action heading into the weekend.
GBP/USD stabilizes near 1.3300, looks to post strong weekly gains
GBP/USD trades modestly higher on the day near 1.3300, supported by the upbeat UK Retail Sales data for August. The pair remains on track to end the week, which featured Fed and BoE policy decisions, with strong gains.
Gold extends rally to new record-high above $2,610
Gold (XAU/USD) preserves its bullish momentum and trades at a new all-time high above $2,610 on Friday. Heightened expectations that global central banks will follow the Fed in easing policy and slashing rates lift XAU/USD.
Week ahead – SNB to cut again, RBA to stand pat, PCE inflation also on tap
SNB is expected to ease for third time; might cut by 50bps. RBA to hold rates but could turn less hawkish as CPI falls. After inaugural Fed cut, attention turns to PCE inflation.
Bank of Japan set to keep rates on hold after July’s hike shocked markets
The Bank of Japan is expected to keep its short-term interest rate target between 0.15% and 0.25% on Friday, following the conclusion of its two-day monetary policy review. The decision is set to be announced during the early Asian session.
Moneta Markets review 2024: All you need to know
VERIFIED In this review, the FXStreet team provides an independent and thorough analysis based on direct testing and real experiences with Moneta Markets – an excellent broker for novice to intermediate forex traders who want to broaden their knowledge base.