A positive risk tone weakens the safe haven USD and strengthens the AUD.
The AUDUSD pair fails to establish impetus on Monday, remaining stuck in a narrow trading zone throughout the Asian session. Spot prices are now trading just below the mid 0.6400s. Still within striking reach of a nearly two-week high set on Friday.
Against the backdrop of recent optimism about more Chinese stimulus. A broadly bullish tone around US equities futures maintains the safe-haven status. The US dollar (USD) The risk-sensitive Australian Dollar (AUD) benefits from the US dollar’s retreat. The USD’s decline might also be linked to some repositioning trading. Ahead of the highly anticipated FOMC monetary policy meeting beginning on Tuesday. Which is regarded as another reason supporting the AUDUSD pair.
The upside is still limited as traders anticipate the important FOMC policy meeting.
The US Federal Reserve is slated to announce its decision on Wednesday. And interest rates are largely expected to remain steady. However, markets are still pricing in another 25 basis point hike in November or December. As a result, the emphasis will be on the following policy statement. This, coupled with Fed Chair Jerome Powell’s statements. At the press conference following the meeting, will be studied for clues regarding the Fed’s future rate hike course. This will have an impact on the short-term USD price dynamics.
Meanwhile, AUDUSD traders should avoid strong negative wagers around the buck. And prepare for any major corrective slide from a six month high reached last week. Aside from that, predictions that the Reserve Bank of Australia (RBA) has already completed its rate-hiking cycle may help to keep the AUDUSD pair under control. As a result, it is essential to wait for substantial follow-through purchasing to establish that spot prices have bottomed out.
There are no Economic data releases scheduled for Monday, putting the AUDUSD pair at the mercy.
There are no market moving economic data releases scheduled for Monday, putting the AUDUSD pair at the mercy of USD price dynamics. Traders will also look for signs from the wider market risk sentiment. Opportunities for the near term. Meanwhile, the mixed underlying backdrop justifies some caution for traders as we approach this week’s significant central bank event risk.
