AUDUSD plunges significantly to 0.6600. RBA is in focus. The pair sank rapidly to close to 0.6610 despite a persistent rise in the USD Index
AUDUSD Focal Points
A continuous increase in the USD Index in anticipation of Fed policies has caused the AUDUSD to fall dramatically to close to 0.6610.
Anxiety about the impending Fed policies is affecting market players’ willingness to take risks.
Decelerating Australian PPI has made the case for maintaining the current interest rate regime stronger.
The Aussie in Acute Selling Pressure
The AUDUSD duo has had a sharp decline after its recovery attempt in the Asian session was unsuccessful in moving over 0.6640. The Australian dollar has experienced selling pressure as investors have shifted money into the US Dollar Index. Due to o of fear over the Fed’s stance on monetary policy.
As market players’ risk appetite is being impacted by pre-Fed policy uncertainty, the S&P500 futures correction in the Asian session has continued. The immediate barrier of 101.70 has been overcome by the USD Index’s extended restoration movement. As another interest rate increase by the Fed is generally expected, there has been a dramatic decline in the market for US sovereign bonds. The 10-year US Treasury rate has increased significantly, approaching 3.53 percent.
Even though the (GDP) figures for the most recent quarter showed a sharp decrease, the USD Index held onto its downtrend on Thursday. Compared to the previous expansion of 2.6%, GDP (Q1) showed a fall of 1.1%. Due to the bleak economic prospects, businesses reduced their inventory to offset consumer expenditure. However, it will provide businesses a chance to start again for Q2 with little inventory.
AUDUSD Looks at RBA and US Fed for Clues
As a result of expectations that the RBA would maintain its neutral position on interest rates, the Australian dollar is under tremendous pressure. RBA Governor Philip Lowe maintained the RBA’s Official Cash Rate (OCR) at 3.60%. Stating that the present range of interest rates is sufficient to restrain persistent inflation.
The justification for maintaining the current interest rate strategy is strengthened by the significant slowdown in Australia’s (PPI) (Q1) inflation. Compared to the previous notification of 1.7% and the prediction of 1.5%. The quarterly PPI has increased by 1.0% at a slower rate. From the projections and the previous release, which was 5.8%, the yearly PPI has been reduced to 5.2 percent.
