As hawkish Fed bets climb and the US NFP is in focus, the AUD/USD currency pair remains fragile at 0.6400.

Oct 07, 2022

VOT Research Desk

Around 0.6400, the AUD/USD is showing symptoms of more weakening as hawkish Fed bets surge.

In order to reduce inflationary pressures, the Fed will keep raising rates.

Fed’s Evans anticipates an overall increase in interest rates of 125 basis points in 2022.

The AUD/USD pair has noticed selling pressure at 0.6432, and it is anticipated that its downward trend will come to an end. The likelihood of a Federal Reserve (Fed) rate increase of 75 basis points (bps) is anticipated to increase, and the asset will most likely revert to the round-level support of 0.6400. As the S&P500 has given up its comeback move; the risk-off attitude is regaining momentum.

According to the CME Fedwatch tool, the likelihood of announcing a fourth straight rate rise of 75 basis points has increased to 75.9%, while the likelihood of a rate hike of half a percentage point has decreased to 24.1%. It is important to note that the US Nonfarm Payrolls (NFP) statistics predictions are muted. Compared to the 315k recorded in August, the payroll gains for September are projected at 250k.

The Federal Reserve (Fed) is willing to temporarily forgo a favorable employment situation in order to fulfill its first aim, which is to provide price stability to the economy. As a result, market investors anticipate that the Fed will keep raising interest rates at their present clip. However, the publication of the US NFP data will shed further light on the Fed’s decision-making.

The Fed’s officials are in favor of more rate increases to address the inflation mess. Charles L. Evans, president of the Chicago Fed Bank, predicts that by the spring of 2023, the central bank will achieve its goal of 4.5–4.75%. A 125 basis point increase in interest rates will also be made by the central bank (bps)

AUD/USD Technical Report