- The AUD/USD falls below the 0.7100 psychological level amidst the lack of fresh impetus.
- The US Federal Reserve’s monetary policy decision keeps traders at bay, dampening their mood.
- Later, Australian Retail Sales are eyed by traders, while US Chicago PMI and CB Consumer Confidence would update the US economy’s status.
The AUD/USD retreats after hitting a daily high at 0.7120, as the US Dollar (USD) recovers some ground against most G8 currencies, underpinned by high US Treasury bond yields and a sour sentiment, as shown by US equities sliding. At the time of writing, the AUD/USD is trading at 0.7076.
US economic data begins to support the Fed’s soft landing
A risk-off impulse keeps investors sidelined ahead of Wednesday’s US Federal Reserve (Fed) monetary decision. The AUD/USD continues to drop, eyeing a January 25 daily low test at 0.7032, which, once conquered, could put into play the 0.7000 mark. Last week’s US economic data, with US Gross Domestic Product (GDP) for Q4 exceeding estimates but lower than Q3’s data, justified a group of Fed officials backing lower-sized rate increases.
In addition, a Fed inflation gauge known as the core Personal Consumption Expenditure (PCE) dropped from 4.7% in November to 4.4% in last month’s annually based. Also, US consumer sentiment improved, as a University of Michigan (UoM) poll reported, while inflation expectations edged lower.
That said, the US Federal Reserve (Fed) is expected to raise rates by a quarter percentage point (0.25%) on Wednesday, ending the era of 75 plus hikes, which lifted the Federal Funds rate (FFR) to the 4.25-4.50% range.
The US Dollar Index (DXU), which measures the buck’s value against a basket of currencies, continued to gain ground and reclaims the 102.000 figure, up 0.15% at 102.079. in the meantime, the US 10-year benchmark note rate extends its gains, up by four basis points (bps) at 3.546%.
What to watch?
The Australian economic docket will feature housing data and the last update of Retail Sales, which are expected to drop to -0.3% MoM. The US calendar will feature the Employment Cost Index (ECI), housing data, the Chicago PMI, and the CB Consumer Confidence Tuesday.
AUD/USD Key Technical Levels
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 bears in the market, chipping away into key support
AUD/USD bulls look to the 38.2% Fibonacci of the prior bearish leg and then 0.6725 which guards a continuation higher. Bears are in the market and eye a move deeper into support.
EUR/USD bears flirt with golden Fibonacci ratio, focus on 1.0765-60
EUR/USD seesaws around 1.0830-20 as the key Fibonacci retracement level probes bears during early Friday, following the Euro pair’s U-turn from a seven-week high the previous day. The Euro marked the first daily loss in six on Thursday as it failed to cross the two-month-old horizontal resistance area surrounding 1.0930-35.
Gold aims to shift business above $2,000, US Durable Goods Orders eyed
Gold price is oscillating in a narrow range of $1,990-2,000 in the early Asian session. The precious metal is struggling to shift its auction above the psychological resistance of $2,000. However, the upside looks favored as the Federal Reserve (Fed) has come closer to halting its policy-tightening cycle.
Arbitrum airdrop flops, but ARB still makes it to a commendable all-time high. Here’s what happened
The token launch for Arbitrum was quite bumpy, to say the least after users could not claim their airdrop tokens for the first one hour post-launch. The turn of events was very disappointing, given that users had been waiting for a week for the highly-advertised ARB airdrop.
Is the banking crisis over, or is the worst yet to come?
When the Fed started signalling higher for longer last summer, everybody assumed that the first thing to break would be consumption, followed by big job losses. Few anticipated that the banking sector would get caught up in the crossfire of the Federal Reserve’s battle against high inflation.