AUD/USD retreats amidst market uncertainty, US debt ceiling disputes ahead of Aussie CPI

• The AUD/USD ends with substantial losses, nearing YTD lows, weighed by disputes amongst Republicans.
• Political discussions surrounding the US debt ceiling and potential leadership change add a sour note to market sentiment.
• Investors are eyeing upcoming inflation data, Private Sector, and Housing Credit from Australia and the Chicago PMI and JOLTs report from the US for further market direction.

AUD/USD is set to finish Tuesday’s session with substantial losses, snapping two days of gains spurred by mixed market sentiment. Factors like Republicans opposing the US debt-ceiling agreement, alongside falling US Treasury bond yields, cushioned the AUD/USD’s fall. However, the AUD/USD is still hovering around the year-to-date (YTD) lows of 0.6510s.

AUD/USD heads towards 0.6510, despite higher-than-expected US Housing Prices despite

US equities finished the session mixed, as debt-ceiling discussions continued amongst Republicans looking to oust Kevin McCarthy as House Speaker. That, alongside falling US bond yields, turned market sentiment sour, weighing on Wall Street and US Treasury bond yields.

Talking about data, the US economic agenda revealed housing prices that advanced more than estimates but were ignored by market participants. Later, the US Conference Board (CB) showed that Consumer Confidence in May slowed to 102.3, above calculations but below April’s 103.7. “Consumer confidence declined in May as consumers’ view of current conditions became somewhat less upbeat while their expectations remained gloomy,” said Ataman Ozyildirim, Senior Director, Economics at The Conference Board.

In the meantime, the Dallas Fed reported that manufacturing activity in their area plunged to -29.1, beneath the prior’s month -23.4 drop, suggesting an ongoing deterioration in the Dallas Fed regional area.

On Wednesday, the Australian economic docket will feature inflation data, Private Sector, and Housing Credit, which could shed some light on the status of households. The Chicago PMI and the JOLTs report will update the economy’s position in the US.

AUD/USD Technical Levels