- AUD/USD falls on dismal Australian data, USD strength.
- US Dollar Index erases majority of Wednesday's losses.
- Economic activity in US is expected to contract by more than 30% in Q2.
The AUD/USD pair posted its highest daily close since April 2019 at 0.7197 on Wednesday but reversed its direction on Thursday. As of writing, the pair was down 0.52% on the day at 0.7148.
DXY gains traction on Thursday
Following its two-day meeting, the FOMC announced on Wednesday that it left its policy rate unchanged as expected. In its statement, the Fed reiterated that it remains committed to using its "full range of tools" to help the economy amid the coronavirus crisis.
During the press conference, FOMC Chairman Jerome Powell refrained from mentioning the possibility of negative rates or yield curve control but acknowledged signs of a slowdown in the recovery with rising COVID-19 cases.
With the initial reaction, the US Dollar Index (DXY) continued to push lower toward 93.00 but staged a decisive rebound on Thursday as the risk-averse environment provided a boost to the USD. At the moment, the DXY is up 0.28% on the day at 93.52.
Later in the session, the second-quarter GDP data, which is expected to show a contraction of 34.1% in the economic activity, will be watched closely by the market participants. If the GDP data comes in worse than expected, the USD could continue to gather strength against its rivals and put additional weight on AUD/USD's shoulders.
Earlier in the day, the data from Australia showed that the ANZ's Business Confidence and the Activity Outlook indexes continued to worsen in July. Additionally, Building Permits in the Country declined by 4.9% on a monthly basis in June.
Technical levels to watch for
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.
Recommended content
Editors’ Picks
AUD/USD could extend the recovery to 0.6500 and above
The enhanced risk appetite and the weakening of the Greenback enabled AUD/USD to build on the promising start to the week and trade closer to the key barrier at 0.6500 the figure ahead of key inflation figures in Australia.
EUR/USD now refocuses on the 200-day SMA
EUR/USD extended its positive momentum and rose above the 1.0700 yardstick, driven by the intense PMI-led retracement in the US Dollar as well as a prevailing risk-friendly environment in the FX universe.
Gold struggles around $2,325 despite broad US Dollar’s weakness
Gold reversed its direction and rose to the $2,320 area, erasing a large portion of its daily losses in the process. The benchmark 10-year US Treasury bond yield stays in the red below 4.6% following the weak US PMI data and supports XAU/USD.
Bitcoin price makes run for previous cycle highs as Morgan Stanley pushes BTC ETF exposure
Bitcoin (BTC) price strength continues to grow, three days after the fourth halving. Optimism continues to abound in the market as Bitcoiners envision a reclamation of previous cycle highs.
US versus the Eurozone: Inflation divergence causes monetary desynchronization
Historically there is a very close correlation between changes in US Treasury yields and German Bund yields. This is relevant at the current juncture, considering that the recent hawkish twist in the tone of the Federal Reserve might continue to push US long-term interest rates higher and put upward pressure on bond yields in the Eurozone.