- AUD/USD continues with its battle to search out acceptance above the 0.6700 mark on Friday.
- The danger-off temper revives demand for the safe-haven USD and caps the risk-sensitive Aussie.
- Expectations for a much less hawkish Fed act as a headwind for the buck and lend some assist.
The AUD/USD pair trims part of its intraday beneficial properties to an almost two-week excessive and retreats beneath the 0.6700 round-figure mark heading into the North American session on Friday.
A contemporary leg down within the fairness markets helps the safe-haven US Greenback to bounce off the each day low and acts as a headwind for the risk-sensitive Australian Greenback. Regardless of multi-billion-dollar lifelines for troubled banks within the US and Europe, buyers stay anxious about widespread contagion and the opportunity of a full-blown international banking disaster. This, together with looming recession fears, takes its toll on the worldwide threat sentiment and drives some haven flows in the direction of the Buck.
That mentioned, declining US Treasury bond yields proceed to weigh on the USD and stay supportive of the intraday bid tone surrounding the AUD/USD pair. Towards the backdrop of the worldwide flight to security, expectations that the Fed will undertake a much less hawkish stance amid the worsening financial circumstances drag the US bond yields decrease. In reality, the markets at the moment are pricing in a higher likelihood of a smaller 25 bps price hike on the upcoming FOMC coverage assembly on March 21-22.
This comes on the again of final week’s collapse of two mid-size US banks – Silicon Valley Financial institution and Signature Financial institution – and warrants some warning for the USD bulls. Merchants, nonetheless, would possibly favor to maneuver to the sidelines forward of subsequent week’s key central financial institution occasion threat. Within the meantime, the Reserve Financial institution of Australia’s (RBA) current dovish shift, signalling that it is likely to be nearing the tip of its rate-hiking cycle, would possibly proceed to cap the upside for the AUD/USD pair, at the very least in the interim.
Subsequent on faucet is the discharge of the Michigan US Shopper Sentiment Index. This, together with the US bond yields and the broader threat sentiment, would possibly affect the USD worth dynamics and supply some impetus to the AUD/USD pair. Nonetheless, spot costs handle to carry within the optimistic territory for the second successive day and stay on observe to finish the week on a optimistic observe, reversing a serious a part of final week’s losses to its lowest degree since November 2022.
Technical ranges to observe
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