AUDUSD remains down towards the six-week low, displaying a three-day downtrend.
As it prints a three-day losing streak following a failed rebound from the six-week low, the AUDUSD accepts offers to renew intraday bottom at 0.6870.
Despite suggesting higher rates and inflation fears, RBA officials Lowe and Elis fail to rekindle their hawkish attitude.
In doing so, the Aussie pair draws cues from the Fed’s hawkish wagers while hesitantly complimenting RBA Governor Philip Lowe’s readiness for higher rates. It’s worth noting that RBA Assistant Governor (Economic) Luci Ellis’ job market concerns contribute to the Aussie pair’s negative pressure. “High inflation is destructive and corrosive,” said RBA Governor Philip Lowe in testimony to the House Economics Committee on Friday morning in Asia. The policymaker also indicated; we are not done yet on rates”.
On a related note, Federal Reserve (Fed) officials were fairly hawkish, citing solid US statistics to support the US Dollar and weigh on the AUDUSD price. Among them, St. Louis Federal Reserve President James Bullard and Cleveland Fed President Loretta Mester were the most recent to support the dollar. “Continued policy rate rises can help lock in a disinflationary trend until 2023, even with sustained growth and healthy labor markets,” said Fed hawk Bullard, “by keeping inflation expectations low.” On the same topic, Fed’s Mester indicated that the Fed will need to move over 5% and remain there for a time.
The decision-maker also stated that she is not ready to indicate if the Fed needs to raise interest rates further at the next policy meeting, but she does not want to surprise the markets. Data from the United States have recently pushed back calls for the Federal Reserve’s (Fed) policy shift.
However, the most recent FED WATCH report from Reuters indicates that the interest rate futures market expects US rates to peak at 5.25% by July before falling to 5.0% by the end of the year.
Strong US data boosts US Treasury bond rates and the US Dollar, weighing on the AUDUSD.
The newest US figures highlight the Producer Price Index (PPI) for January, which increased by 0.7% month on month, the largest since June.
The improvement in US Initial Jobless Claims for the week was also favorable for the US Dollar. 194K compared to 200K projected and 195K previous. Alternatively, a drop in January Housing Starts and the Philadelphia Fed Manufacturing Survey for February seems to have gotten some notice. During an interview with NBC News, US President Joe Biden launched shots at his Chinese counterpart while relaying expectations for a meeting with the Chinese leader.
Wall Street finished in the red, with the S&P 500 Futures down 0.30% intraday as of press time. It is worth noting that the US 10-year Treasury bond with the latest print of 3.86%, yields increased to the highest levels in 2023, while its two-year equivalent likewise printed slight advances to conclude the day around 4.64%, making rounds to the highest levels since November 2022. The US Dollar Index (DXY) rose to a six-week high of 104.23 before falling to 104.03 by Thursday’s close.
