- AUD/USD is on course to end the week sharply lower around the 0.7400 level, down about 1.6%.
- A dovish RBA on Tuesday was the major catalyst behind this week’s sharp drop.
AUD/USD is on course to end the week sharply lower around the 0.7400 level, about a 1.6% or 120 pip drop from last Friday’s closing levels around 0.7520. That marks the worst week for the pair since August.
Recapping this week's price action
AUD/USD was weighed heavily on Tuesday, falling from above 0.7500 to the low 0.7400s after the RBA delivered strong pushback against STIR market pricing for rate hikes as soon as 2022; RBA Governor Philip Lowe called the pricing an “over-reaction” to recent global inflation data and explained that it was far from clear whether or not such inflationary pressures would show up in Australia. The bank conceded that it might need to hike rates in 2023, a hawkish shift from their previous position of saying no rate hikes into 2024, but that would still leave the RBA substantially behind other major G10 central banks in terms of monetary policy normalisation, including the RBNZ, Norges Bank, BoC, Fed and BoE.
After consolidating on Wednesday, the Aussie dollar took a turn for the worse again on Thursday after the BoE roiled global rate and FX markets with a surprise decision not to hike interest rates by 15bps, triggering further global dovish repricing that seemed to hurt AUD in particular. That pushed AUD/USD down from the mid-0.7400s to under the psychological 0.7400 level. In wake of a very strong US labour market report on Friday, it seemed things were set to get even worse for Aussie, with AUD/USD at one point dropping as low as the 0.7460 level.
But a sharp drop in global developed market long-term yields led by the US has taken the wind out the US dollar’s sails and the Dollar Index, which did briefly hit a year-to-date high above 94.60 in the immediate aftermath of the jobs report, has now reversed into negative territory on the day in the 94.20s, giving tailwinds to its major G10 counterparts, including AUD. Thus, AUDUSD has been able to recover back to the 0.7400 level. FX markets now turn their attention to next week’s US October Consumer Price Inflation report on Wednesday, followed by the October Australia jobs report during Thursday’s Asia Pacific session. With regards to the former, the headline YoY rate of CPI is seen rising to a fresh multi-decade highs at 5.8%, reflecting the sharp recent rise in energy costs, as well as other rising cost pressures. It is likely to serve as a reminder that the Fed’s “transitory” argument is on shaky ground.
|Today last price||0.7402|
|Today Daily Change||0.0001|
|Today Daily Change %||0.01|
|Today daily open||0.7401|
|Previous Daily High||0.7471|
|Previous Daily Low||0.7382|
|Previous Weekly High||0.7557|
|Previous Weekly Low||0.7463|
|Previous Monthly High||0.7557|
|Previous Monthly Low||0.7191|
|Daily Fibonacci 38.2%||0.7416|
|Daily Fibonacci 61.8%||0.7437|
|Daily Pivot Point S1||0.7365|
|Daily Pivot Point S2||0.7329|
|Daily Pivot Point S3||0.7276|
|Daily Pivot Point R1||0.7454|
|Daily Pivot Point R2||0.7507|
|Daily Pivot Point R3||0.7543|
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.