|

AUD/USD persists near the lows of the year post-RBNZ hike, dovish US FOMC minutes

  • AUD/USD remains downward pressured as Fed minutes reveal uncertain future for rate hikes.
  • While some Fed officials see the May meeting’s 25 bps rate hike as potentially the last, others caution on the need for flexibility in future meetings.
  • Although rate cuts seem unlikely in the near term, policymakers emphasize the need to remain open to rate hikes if necessary, stressing transparency in communication.

AUD/USD prolonged its fall after hitting a new year-to-date (YTD) low of 0.6529. It remains under downward pressure as the Federal Reserve Open Market Committee (FOMC) revealed its May minutes, which showed an uncertain scenario for further tightening. This hints the US central bank is open to holding rates unchanged if needed. At the time of writing, the AUD/USD is trading at 0.6542.

May FOMC’s minutes show uncertainty amongst Fed officials over future hikes

The recently released meeting minutes of the Federal Reserve’s May gathering shed light on the prevailing uncertainty among policymakers. While some officials approved a 25 basis points rate hike, they emphasized that this could potentially be the last one. On the other hand, several policymakers cautioned that flexibility should be maintained in the upcoming meetings.

Officials expressed their belief that if the economy continues to progress “along the lines of their current outlooks,” further tightening of monetary policy may not be necessary beyond the present meeting.

The staff of the Federal Reserve presented projections indicating a mild recession towards the end of the year. They highlighted evidence that the cumulative effect of previous tightening measures has started to impact the economy. In particular, concerns were raised by “almost all participants” regarding the risks to economic growth as bank credit conditions tighten.

During the meeting, participants generally agreed that rate cuts were unlikely in the near term. However, they emphasized the need to remain open to the possibility of rate increases if the circumstances warrant it. In this regard, the importance of transparently communicating the Fed’s data-dependent approach to the public was underscored. The Federal Reserve aims to maintain flexibility in responding to evolving economic conditions by adopting a meeting-by-meeting approach after the May meeting.

AUD/USD reaction to the FOMC’s minutes

AUD/USD Hourly chart

The AUD/USD reaction was muted, following the NZD/USD pair path, after the Reserve Bank of New Zealand (RBNZ) dovish rate hike. Hence, the AUD/USD clashed with the S3 daily pivot before reversing its downward course, and so far is aiming toward the 0.6550 area. Nevertheless, the AUD/USD is still operating with losses, with upside risks at the S2 pivot point at 0.6570, before testing the 0.6600 figure. Conversely, a bearish continuation could open the door for further losses, below the YTD low of 0.6529, like the 0.6500 figure.

AUD/USD

Overview
Today last price0.6545
Today Daily Change-0.0065
Today Daily Change %-0.98
Today daily open0.661
 
Trends
Daily SMA200.6674
Daily SMA500.6685
Daily SMA1000.6783
Daily SMA2000.671
 
Levels
Previous Daily High0.6662
Previous Daily Low0.6607
Previous Weekly High0.671
Previous Weekly Low0.6605
Previous Monthly High0.6806
Previous Monthly Low0.6574
Daily Fibonacci 38.2%0.6628
Daily Fibonacci 61.8%0.6641
Daily Pivot Point S10.6591
Daily Pivot Point S20.6572
Daily Pivot Point S30.6536
Daily Pivot Point R10.6645
Daily Pivot Point R20.6681
Daily Pivot Point R30.67

Author

Christian Borjon Valencia

Markets analyst, news editor, and trading instructor with over 14 years of experience across FX, commodities, US equity indices, and global macro markets.

More from Christian Borjon Valencia
Share:

Editor's Picks

AUD/USD keeps range near mid-0.7100s as USD bulls await US CPI

AUD/USD steadies near mid-0.7100s in the Asian session on Friday, stalling the previous day's sharp decline to an over one-week low. The August PPI report reaffirmed Fed rate-hike bets and boosted the US Dollar on Thursday, which weighed heavily on the pair. However, hawkish RBA expectations limited losses for the Aussie as USD bulls now await the release of the US consumer inflation figures before placing fresh bets.

USD/JPY holds lower ground toward 154.00; looks to US CPI

USD/JPY holds lower ground toward 154.00 in the Asian session on Friday after hot Japanese PPI data bolster a more hawkish BoJ repricing and provide fresh impetus to the Japanese Yen. However, the downside appears capped as the US Dollar preserves overnight gains ahead of the latest US consumer inflation data.

Gold rebounds and retargets $4,400

Gold regains composure and trades with decent gains on Friday, managing to refocus in attention to the $4,440 mark per ounce troy. Therefore, the precious metal reverses Thursday’s decline amid a marginal retracement in the US Dollar after the release of August inflation print.

Ripple Price Forecast: XRP extends decline as returning ETF inflows fail to lift outlook
Ripple (XRP) falls below $1.33 on Friday, marking the third consecutive day of declines. The token continues to track the broader cryptocurrency market downturn, with investors closely monitoring heightened macroeconomic uncertainty ahead of the United States (US) Consumer Price Index (CPI) release and next week’s Federal Reserve (Fed) monetary policy decision.
Weekly focus – The hawks set the tone
Risky assets came under pressure this week as energy prices kept creeping higher and the ECB surprised the markets with a hawkish tone. The price of Brent crude touched USD 110 per barrel on Thursday night, highest since mid-May, as news emerged that the Yemeni Houthis had reached control of key port cities and islands near the Bab el-Mandeb strait.
Venezuela’s 65-billion-barrel Oil deal could reshape America’s inflation fight
The United States (US) has secured unprecedented access to part of Venezuela’s vast Oil reserves. The timing is particularly significant as the war with Iran is disrupting Middle Eastern supplies, keeping energy prices elevated and reviving concerns about inflation.