AUDUSD is making a slight rebound from a new YTD low.
The AUDUSD pair recovers a few pips from the 0.6430-0.6425 region, or a new low since November 2022. But fails to sustain the recovery. Spot prices are currently trading in the mid-0.6400s, remaining in the red. For the seventh consecutive day, and appear vulnerable to continuing the recent downward trend seen over the last month or so.
Falling US bond yields keep USD bulls on the defensive and support the major.
The US Dollar (USD) bulls are kept going by a milder tone around US Treasury bond yields. Below a more than two-month high reached on Monday. The defensive is seen offering some support to the AUDUSD pair. A slightly oversold Relative Strength Index (RSI) on the daily chart also pushes traders to reduce their bearish wagers. Contributing to the minor intraday recovery. Meanwhile, the USD’s downside is being cushioned by rising agreement. That the Federal Reserve (Fed) will maintain interest rates higher for longer.
Bets on another Fed rate hike limit the USD’s decline and cap the pair in the face of China’s economic difficulties.
It is worth noting that the US Federal Reserve is largely expected to pause the rate-hiking cycle at its September policy meeting. Markets, on the other hand, are still pricing in the probability of another 25-basis point hike. Before the end of the year. The optimistic US Retail Sales figures reported on Tuesday confirmed bets. Indicating that consumer spending kept up nicely in July. This, in turn, is likely to operate as a tailwind for US bond yields and the USD. Which, together with concerns over China’s deteriorating economic conditions, could limit gains for the AUDUSD pair.
Another wave of poor Chinese macro data released on Tuesday fueled concerns that the world’s second-largest economy’s post-COVID rebound has faltered after a strong start in the first quarter. Even a surprise rate decrease by the People’s Bank of China (PBoC) does nothing to increase investor confidence, therefore investors should exercise care before placing optimistic wagers on the China-proxy Australian Dollar (AUD). As a result, substantial follow-through is required. To establish that spot prices have formed a near-term bottom and to position for any serious recovery, buying is required.
Traders are now looking ahead to the US economic calendar.
Market participants are now looking ahead to the US economic calendar. Which includes the publication of Building Permits, Housing Starts, and Industrial Production numbers later in the North American session. This, together with US bond yields and overall risk sentiment, may impact USD price dynamics and provide some momentum to the AUDUSD pair. The attention, though, will remain on the FOMC meeting minutes, which will be scrutinized for clues about the Fed’s future rate-hike course and will help determine the Greenback’s near-term trajectory.
