AUDUSD fell to a one-week low on Tuesday, weighed down by a number of reasons.
The AUDUSD pair is under selling pressure for the second day in a row on Tuesday, extending its recent slide from the highest level since June 2022, which was reached last week. The negative trend has dragged spot prices to a one-week low, around the mid-0.7000s, during the early European session, and is being fueled by a number of reasons. The Australian Dollar has been dragged down by poor domestic microdata, which revealed that Retail Sales fell in December.
Disappointing Australian Retail Sales statistics weigh on the AUDUSD despite the USD’s minor rise.
Apart from that, a little strengthening of the US dollar appears to be another reason putting negative pressure on the AUDUSD pair. The general cautious tone is anticipated driving some refuge flows to the greenback and hurting the risk-averse Australian dollar. Market confidence remained weak in the face of uncertainties over a substantial rebound in the Chinese economy, as well as the country’s worst COVID-19 epidemic to date.
This somewhat offsets the better-than-expected Chinese PMI prints for January and does nothing to please markets or bring quick relief to the China-proxy Australian Dollar, at least for the time being.
Bets on lower Fed rate rises keep the dollar under control and may help limit losses for the major.
Meanwhile, the USD rise lacks positive conviction as expectations rise for a lesser 25 basis point Fed rate hike at the end of a two-day policy meeting on Wednesday. This, along with the flight to safety, causes a little decrease in US Treasury bond rates, acting as a headwind for the dollar. This, in turn, necessitates considerable prudence while situating. if the AUDUSD pair continues to tumble.
Traders may also opt to remain on the sidelines ahead of Wednesday’s important FOMC monetary policy announcement. Meanwhile, Tuesday’s US economic calendar, which includes the Chicago PMI and the Conference Board’s Consumer Confidence Index, will be scrutinized for any stimulus. This, combined with wider risk sentiment, may push the USD and create short-term chances in the AUDUSD pair.
