AUD/USD stays positive after retracing from 0.6740s, as investors eye Fed Powell


Share:
  • Mixed sentiment was no excuse for the Australian Dollar to appreciate against the US Dollar.
  • Investors continue to assess the latest Federal Reserve hawkish commentary.
  • Fed Williams commented that the path of rates is higher than September’s projections.
  • Chinese officials urged local governments to avoid lockdowns and committed to vaccinating older adults.

The Australian Dollar (AUD) is erasing some of Monday’s losses against the US Dollar (USD) even though market sentiment deteriorated, as shown by Wall Street, set to end in the red. Latest Federal Reserve (Fed) officials’ hawkish comments,  China’s Covid-19 woes, and weak retail sales data in Australia are the main drivers of the day. At the time of writing, the AUD/USD is trading at 0.6684, above its opening price b 0.50%, but off the day’s high of 0.6748.

Hawkish Fed commentary deteriorated investors’ mood as Fed Chair Jerome Powell is eyed

The equity markets in the United States (US) wavered by a slide in mega-cap equities. Federal Reserve policymakers led by the St. Louis Fed President James Bullard said the central bank has “ways to go to a restrictive policy.” Bullard added that the Fed needs to increase rates until 2023 and foresees the Federal Funds rate (FFR) to peak at around 5% to 7%. Echoing some of his remarks was the New York Fed President John Williams, adding that the strong economy in the US “suggests a modestly higher path for policy relative to September. Not a massive change, but somewhat higher.” Williams added that inflation could fall to 5.0%-5.5% by the end of 2022 and 3.0%-3.5% by late 2023.

Given that the Federal Reserve Open Market Committee (FOMC) November minutes opened the door to slow the pace of borrowing cost increases, Wednesday’s speech of the Federal Reserve Chair Jerome Powell is eyed ahead of the last meeting of 2022.

Consumer Confidence in the United States falls to a 4-month low

Data-wise, the US economic calendar revealed that Consumer Confidence or November, reported by the Conference Board (CB), dropped to a four-month low of 100.2, weighed by the combination of inflation and interest rate hikes, posing a challenge to consumers, threatening to slow the economic growth in 2023.

Elsewhere, the US Dollar Index (DXY), a measure of the greenback value against a basket of six currencies, bounced off daily lows around 106.058 and climbed to 106.795, registering moderate gains of 0.12%, capping the AUD/USD gains.

China’s Covid-19 riots waned, but weak Australian retail sales weighed on the AUD

Aside from this, the Covid-19 riots in China appeared to wane as cases edged lower. On Monday, China reported 38,421 new local cases, down from the 40,052 record high reported for Sunday, with no deaths for two straight days. Health officials urged local governments to avoid unnecessary and lengthy lockdowns. Chinese health officials said the Omicron variant is less severe while committed to vaccinating elder people aged 80 or older.

Also, Australia’s weaker-than-expected October Retail Sales report put a lid on Tuesday’s AUD/USD rally. Figures showed that sales plunged 0.2% MoM against a 0.5% expansion estimate.

Australia and US economic calendar

Australia’s economic calendar will feature Housing Data and the Reserve Bank of Australia (RBA) Governor Kearns’s speech. On the US front, the docket would be busy with employment figures to be released, GDP, the Goods Trade Balance, Wholesales Inventories, the Chicago PMI, Pending Home Sales, and Fed speaking, led by the Federal Reserve Chairman Jerome Powell.

AUD/USD Price Analysis: Technical outlook

The AUD/USD remains neutral-to-upward biased, though failure to crack 0.6750 caused a 70-pip retracement on the pair, back below 0.6700. Albeit the inverted head-and-shoulders is still in play, Tuesday’s candlestick printed a sizeable upper wick, suggesting that sellers stepped in around the 23.6% Fibonacci level around 0.6703. Therefore, the AUD/USD path of least resistance near term is downwards.

The AUD/USD key support levels are the 38.2% Fibonacci retracement at 0.6643, followed by the figure at 0.6600 and the 61.8% Fibonacci retracement at 0.6546.

Share: Feed news

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.

Follow us on Telegram

Stay updated of all the news

Join Telegram

Recommended content


Follow us on Telegram

Stay updated of all the news

Join Telegram

Recommended content

Editors’ Picks

EUR/USD holds above 1.0700, eyes on Powell

EUR/USD holds above 1.0700, eyes on Powell

EUR/USD edged lower toward 1.0700 in the early European session but managed to hold above that level. As investors await speeches from ECB officials and FOMC Chairman Jerome Powell, the pair struggles to make a decisive move in either direction.

EUR/USD News

GBP/USD falls to fresh monthly low below 1.2000

GBP/USD falls to fresh monthly low below 1.2000

GBP/USD came under renewed bearish pressure and touched its lowest level in a month below 1.2000 on Tuesday. Despite the modest improvement witnessed in risk mood, the US Dollar holds its ground and weighs on the pair as focus shifts to FOMC Chairman Powell's speech.

GBP/USD News

Gold retreats below $1,870 as US yields rebound

Gold retreats below $1,870 as US yields rebound

Gold price erased its daily recovery gains and turned flat slightly below $1,870 heading into the American session. Following a downward correction earlier in the day, the benchmark 10-year US Treasury bond yield staged a rebound and caused XAU/USD to turn south ahead of FOMC Chairman Powell's speech.

Gold News

Will Bitcoin price test $20,000 again?

Will Bitcoin price test $20,000 again?

Bitcoin price shows clear signs of distribution occurring on the four-hour chart, which indicates the possibility of a trend reversal. Moreover, BTC has been consolidating for more than two weeks with no direction in sight.

Read more

Central banks, markets and the economy: Three times wrongfooted

Central banks, markets and the economy: Three times wrongfooted

In the US, financial conditions have eased in recent months and weighed on the effectiveness of the Fed’s policy tightening. Jerome Powell recently gave the impression of not being too concerned, so markets rallied.

Read more

Forex MAJORS

Cryptocurrencies

Signatures