AUD/USD maintains-gains near the middle of the 0.6400s, but there is no follow-through ahead of RBA on Oct 4.

Oct 3, 2022
VOT Research Desk

Key Insights and Analysis

On Monday, the AUD/USD pair sees some buying near 0.6400 and maintains its bid tone into the early European session. The pair is currently up 0.70 percent for the day and appears to have ended its two-day losing streak. It is trading in the middle of the 0.6400s.

On Monday, the AUD/USD pair sees some buying near 0.6400 and maintains its bid tone into the early European session. The pair is currently up 0.70 percent for the day and appears to have ended its two-day losing streak. It is trading in the middle of the 0.6400s.

The US dollar is experiencing some downward pressure as a result of a number of factors, which provides the AUD/USD pair with some support. Kwasi Kwarteng, the finance minister of the United Kingdom, said that his government will not implement a plan to eliminate a 45 percent income tax rate, which would have given the British pound a slight boost. The USD bulls remain on the defensive as a result of this and falling yields on US Treasury bonds.

In point of fact, the benchmark 10-year US Treasury note falls short of a 12-year high that was reached on Wednesday. Aside from this, the risk-averse Australian dollar has benefited from signs of stability in the financial markets, such as a positive tone around the US equity markets.

Despite this, aggressive bulls should exercise caution due to the lack of follow-through selling.

In anticipation of the crucial policy decision made by the Reserve Bank of Australia on Tuesday, traders appear reluctant and may prefer to stay put. In the meantime, there should be a tailwind for US bond yields and a limit on the downside for the USD as a result of growing acceptance that the Federal Reserve will continue to raise interest rates at a faster pace. The AUD/USD pair’s upside may be constrained as a result of this.

As a result, before preparing for any further near-term appreciation moves, it will be prudent to wait for strong follow-through buying. Presently, market participants anticipate the US ISM Manufacturing PMI, which is scheduled for later in the early North American session. The USD will be affected as a result of this, as will the broader risk sentiment and yields on US bonds. Additionally, this will give the AUD/USD pair some momentum.

Technical Analytics