AUD/USD remains bid despite risk-off in Asian equities
- The AUD is surprisingly reporting gains amid risk aversion.
- The greenback is on the defensive as turmoil may force the Fed to soften is hawkish tone.
Currently, the AUD/USD is reporting a 0.30 percent gain at the session high of 0.7080 despite the heightened risk aversion in the equities.
Stepping back, the Australian dollar and other risk currencies took a beating yesterday as the Dow Jones Industrial Average tanked more than 600 basis points. The S&P 500 and the Nasdaq also reported sharp losses.
The increased haven demand for the treasuries likely lifted the greenback higher.
However, the Asian desks are viewing things differently - the US dollar is being offered possibly on fears that sustained risk aversion may force the Fed to soften its hawkish stance and delay the December rate hike.
Looking ahead, the corrective rally in the AUD/USD may gather pace if the European and US desks also see market instability taming Fed's aggression.
AUD/USD Technical Levels
Resistance: 0.7106 (previous day's low), 0.7160 (Oct. 17 high), 0.7186 (50-day EMA + falling trendline)
Support: 0.7055 (session low), 0.7041 (Oct. 8 low), 0.70 (psychological support)
Author
Omkar Godbole
FXStreet Contributor
Omkar Godbole, editor and analyst, joined FXStreet after four years as a research analyst at several Indian brokerage companies.
