- AUD/USD gains some positive traction for the fourth straight day amid sustained USD selling.
- The Fed’s dovish pivot continues to drag the US bond yields lower and weigh on the greenback.
- A softer risk tone seems to act as a headwind for the risk-sensitive Aussie ahead of the NFP report.
The AUD/USD pair reverses an intraday dip to sub-0.6800 levels and turns positive for the fourth successive day on Friday. The steady intraday ascent extends through the first half of the European session and lifts spot prices to the 0.6835 region, back closer to the highest level since September 13 touched on Thursday.
The US Dollar selling remains unabated amid rising bets for a less aggressive policy tightening by the Fed, which, in turn, acts as a tailwind for the AUD/USD pair. The dovish-sounding comments by Fed Chair Jerome Powell, along with signs of easing inflationary pressures, reaffirmed expectations that the US central bank will slow the rate-hiking cycle. This is evident from slugging US Treasury bond yields and continues to weigh on the greenback.
Furthermore, hopes of more stimulus from China and the easing of stringent COVID-19 restrictions in the world's second-largest economy offer additional support to the China-proxy Australian Dollar. That said, the cautious market mood could act as a headwind for perceived riskier currencies and keep a lid on any further gains for the AUD/USD pair. Traders also seem reluctant to place aggressive bets ahead of the US monthly employment details.
The popularly known NFP report is due later during the early North American session and will provide fresh insight into the US labour market. This might influence the Fed's policy outlook and drive the USD demand ahead of the next FOMC meeting on December 13-14. Apart from this, the broader market risk sentiment should provide some impetus to the AUD/USD pair. Nevertheless, spot prices seem poised to post gains for the second straight week.
Technical levels to watch
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