The AUD/USD pair witnessed an intraday turnaround from the vicinity of mid-0.7200s and drifted into negative territory for the third successive day on Tuesday. The downward trajectory extended through the early North American session and dragged spot prices to a three-day low, around the 0.7155 region in the last hour.
The Australian dollar strengthened after the Reserve Bank of Australia (RBA) raised interest rates by 0.50% (more-than-expected) on Tuesday and indicated that further tightening is in the pipeline. The initial market reaction, however, turned out to be short-lived amid the prevalent bullish sentiment surrounding the US dollar.
Expectations that a more aggressive move by major central banks to constrain inflation could pose challenges to the global economic growth continued weighing on investors' sentiment. This was evident from a weaker tone around the equity markets, which, along with elevated US Treasury bond yields, underpinned the safe-haven buck.
Investors remain concerned that global supply chain disruption caused by the Russia-Ukraine war would push consumer prices even higher. This might force the US central bank to tighten its monetary policy at a faster pace, which, in turn, assisted the yield on the benchmark 10-year US government bond to hold steady above the 3.0% threshold.
Hence, the market focus will remain glued to the latest US consumer inflation figures, due for release on Friday. The US CPI report might influence the Fed's tightening path and the USD price dynamics. This, in turn, would provide a fresh impetus to the AUD/USD pair and help determine the next leg of a directional move.
In the meantime, the US bond yields will continue to play a key role in driving the USD demand amid absent top-tier US economic data on Tuesday. Apart from this, traders will take cues from the broader market risk in order to grab short-term opportunities around the AUD/USD pair.
© 2000-2024. All rights reserved.
This site is managed by Teletrade D.J. LLC 2351 LLC 2022 (Euro House, Richmond Hill Road, Kingstown, VC0100, St. Vincent and the Grenadines).
The information on this website is for informational purposes only and does not constitute any investment advice.
The company does not serve or provide services to customers who are residents of the US, Canada, Iran, The Democratic People's Republic of Korea, Yemen and FATF blacklisted countries.
Making transactions on financial markets with marginal financial instruments opens up wide possibilities and allows investors who are willing to take risks to earn high profits, carrying a potentially high risk of losses at the same time. Therefore you should responsibly approach the issue of choosing the appropriate investment strategy, taking the available resources into account, before starting trading.
Use of the information: full or partial use of materials from this website must always be referenced to TeleTrade as the source of information. Use of the materials on the Internet must be accompanied by a hyperlink to teletrade.org. Automatic import of materials and information from this website is prohibited.
Please contact our PR department if you have any questions or need assistance at pr@teletrade.global.