- Westpac Leading Index in Australia drops to -0.28% in August.
- US Dollar Index clings to modest gains, stays below 98.50.
- Federal Reserve is expected to announce a 25 basis points rate cut later today.
The AUD/USD came under pressure during the Asian trading hours on Tuesday pressured by the Reserve Bank of Australia's (RBA) dovish tone in its meeting minutes but was able to stage a recovery and close the day with small gains boosted by the selling pressure surrounding the USD. However, the pair struggled to stretch higher on Wednesday and is now trading at 0.6840, erasing 0.35% on a daily basis.
Earlier today, the Westpac Leading Index in Australia slumped to -2.8% in August from +0.2% (revised up from +0.14%) in July and put additional weight on the AUD's shoulders.
USD waits for FOMC decision, Powell presser
On the other hand, despite the upbeat industrial production data from the US yesterday, the US Dollar Index lost its traction on easing concerns over the possible negative impact of rising crude oil prices on the global economy and erased Monday's losses. However, ahead of the Federal Reserve's policy announcements and Federal Open Market Committee (FOMC) Chairman Jerome Powell's remarks, the index is posting modest gains near 98.40, keeping the bearish pressure on the pair intact.
Previewing the FOMC decision, “We think that the bar for a hawkish surprise is now higher compared to only a couple of weeks ago suggesting limited scope for a USD-positive reaction and a major sell-off in UST after the announcement,” said ING analysts.
Technical levels to watch for
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