The AUD/USD currency pair has encountered renewed selling pressure, experiencing a decline following an intraday rise to the 0.6760 mark. This drop marks the fifth consecutive day of negative movement, with spot prices slipping to the 0.6725-0.6720 range during the early European session, nearing a three-week low reached on Tuesday. Current trading activity has brought the pair close to the 50-day Simple Moving Average (SMA), indicating bearish sentiment.
The Australian Dollar’s (AUD) ongoing struggles can be attributed to disappointment regarding recent stimulus updates from China. The National Development and Reform Commission of China reported on Tuesday that the economy is facing increasingly complex internal and external challenges, failing to announce any substantial new stimulus measures. This development has overshadowed the hawkish tone reflected in the Reserve Bank of Australia‘s (RBA) September meeting minutes.
In the U.S., investors are reassessing expectations for aggressive policy easing by the Federal Reserve (Fed), especially in light of a resilient labor market. Consequently, the yield on the benchmark 10-year U.S. government bond remains elevated above the 4% mark, while the U.S. Dollar Index (DXY), which measures the Greenback against a basket of currencies, hovers near a seven-week high achieved last Friday. Additionally, a generally weaker sentiment in equity markets has bolstered demand for the safe-haven U.S. dollar, further pressuring the risk-sensitive Australian dollar.
Given this backdrop, the AUD/USD pair is likely to continue its retracement from the recent peak of 0.6940-0.6945 reached last month. However, bearish traders appear hesitant to make fresh bets, opting to await clearer indications regarding the Fed’s potential rate-cut strategy. Market attention will remain fixed on the release of the FOMC meeting minutes later today, followed by the U.S. Consumer Price Index (CPI) and Producer Price Index (PPI) reports scheduled for Thursday and Friday, respectively.
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