AUD/USD keeps losses around 0.7700, focus shifts to Fed, Aus jobs

The AUD/USD pair continues to meander near daily lows reached just shy of the 0.77 handle, with the bears threatening to break below the 2018 lows of 0.7687 amid persistent broad-based US dollar strength and negative copper prices.

The greenback remains broadly underpinned amid higher Treasury yields, as markets prepare for a 25 bps Fed rate hike announcement due tomorrow while all eyes remain on the first press conference by the new Fed Chair Powell for fresh insights on the future monetary policy path.

Moreover, increased cautiousness ahead of the Australian labor market report combined with weaker copper prices also added to the negative sentiment around the Aussie. Meanwhile, the divergent monetary policy outlooks between the Fed and RBA continue to remain supportive of the US dollar.

The latest RBA meeting minutes released today showed that the Australian central bank remains concerned over the high household debt levels and stressed the need for faster wage growth. Hence, Australia is unlikely to follow the Fed’s rate hike trajectory, as the RBA believes the low rates continue to play a part in lowering unemployment and lifting inflation.

In the day ahead, in absence of any fresh macro news from the US docket, the spot will continue to track the USD price-action and broad market sentiment ahead of the FOMC verdict and Aus employment data.

AUD/USD levels to watch

Jim Langlands at FX Charts, notes: “Overall, I prefer the downside still, and if correct, below 0.7685/90 would allow a move towards 0.7645, with only minor support at 0.7670 lying ahead of that. Under there would allow a move to the 100 DMA (0.7615) and to major rising trend support 0.7570, although that may take a while. On the topside, resistance will be seen at 0.7725 and then at 0.7740 and 0.7770.”