AUD/USD slides to near 0.6470 as US Dollar gains, PCE Inflation in focus

AUD/USD drops to near 0.6470 as the US Dollar rises after Fed Cook’s lawsuit announcement.
Investors expect Trump’s attempt to politicize Fed had dampened US Dollar’s dominance.
Inflation in Australia grew at a faster-than-expected pace of 2.8% in July.

Sagar Dua FXStreet

The AUD/USD pair falls to near 0.6470 during the European trading session on Wednesday. The Aussie pair declines as the US Dollar (USD) attracts bids after Federal Reserve (Fed) Governor Lisa Cook announced that she will file a lawsuit against her termination by United States (US) President Donald Trump on Monday.

At the time of writing, the US Dollar Index (DXY), which tracks the Greenback’s value against six major currencies, trades 0.44% higher to near 98.65.

However, the outlook of the US Dollar has become uncertain as doubts among investors over the credibility of the Fed going forward have increased.

Market experts believe that decisions on interest rates from Fed Cook’s replacement would be biased towards US President Trump’s economic agenda.

On the economic front, investors await the US Personal Consumption Expenditure Price Index (PCE) data for July, which will be released on Friday. The core PCE inflation data, which is closely tracked by Fed officials as it excludes volatile food and energy items, is expected to have grown at an annual pace of 2.9%, faster than the prior release of 2.8%.

Meanwhile, the Australian Dollar fails to attract bids even as Australian Monthly Consumer Price Index (CPI) data for July has come in stronger-than-projected. The inflation data rose at an annual pace of 2.8%, faster than expectations of 2.3% and the prior reading of 1.9%.

Economic Indicator

Monthly Consumer Price Index (YoY)

The Monthly Consumer Price Index (CPI), released by the Australian Bureau of Statistics on a monthly basis, measures the changes in the price of a fixed basket of goods and services acquired by household consumers. The indicator was developed to provide inflation data at a higher frequency than the quarterly CPI. The YoY reading compares prices in the reference month to the same month a year earlier. A high reading is seen as bullish for the Australian Dollar (AUD), while a low reading is seen as bearish.

AUD/USD flatlines near 0.6965 as less hawkish RBA counters USD weakness

AUD/USD holds steady above a two-week low, trading near 0.6965 in the Asian session on Wednesday as early midterm election results heighten political uncertainty and weigh heavily on the US Dollar. Moreover, reviving safe-haven demand triggers a fresh leg down in US bond yields, offsetting Fed hike bets and exerting additional pressure on the buck. However, a less hawkish RBA caps the Aussie.

USD/JPY declines below 158.00 as USD weakens on midterm election results

USD/JPY comes under heavy selling pressure on Wednesday, dropping below 158.00 during the Asian session as the US Dollar slumps to a one-month low amid heightened political uncertainty after early US midterm vote counts. Moreover, the prospect of gridlock in Washington drives safe-haven flows, triggering a fresh leg down in US bond yields and further weighing on the buck.

Gold surges past $4,000 as USD falls in reaction to US midterm election results

Gold catches aggressive bids on Wednesday, surging past the $4,000 psychological mark heading into the European session as the US midterm election results heighten political uncertainty and weigh heavily on the US Dollar. Moreover, softer US bond yields counter Fed hike bets and contribute to driving flows to the non-yielding bullion.

Bitcoin tests critical support, Ethereum struggles below resistance, XRP extends losses

Bitcoin (BTC), Ethereum (ETH) and Ripple (XRP) remain under pressure on Wednesday as bearish momentum continues to weigh on prices. BTC approaches key support around $76,466, and a decisive close below could open the door to deeper losses. Meanwhile, ETH struggles below key resistance while XRP faces rejection at the upper trendline of a falling channel pattern, all hinting at deeper losses.

US Dollar Index dives to late September lows near 101.25 on US election results

The US Dollar Index, which tracks the Greenback against a basket of currencies, comes under intense selling pressure during the Asian session on Wednesday, dropping to its lowest level since late September as early US midterm election results heightened political uncertainty.

The 2% inflation target came from a throwaway remark. It now moves trillions

The Federal Reserve's 2% inflation goal grew out of an off-the-cuff remark by a New Zealand politician in 1988. Bond investors still price long-term US debt as if 2% holds, so a change in how the Fed measures inflation would move markets.