AUD/USD reverses direction and slips to 0.6335 in Wednesday risk-off market flows

• The AUD/USD is backsliding into 0.6335 after Wednesday markets saw risk appetite evaporate.
• Investor confidence is souring as the Gaza conflict weighs on global sentiment and the US barrels towards yet another debt deadline standoff.
• Aussie traders will be looking ahead to Thursday's Australia labor data with an appearance from Fed Chair Powell on the cards.

The AUD/USD saw an early climb into a daily high of 0.6393 following hawkish, infaltion-fighting comments from Reserve Bank of Australia (RBA) Governor Michelle Bullock early Wednesday, but the bidding momentum would prove to be short-lived as broader market sentiment took a turn for the bearish, sending the AUD/USD back into 0.6330 as investors shake out of risk assets.

RBA’s Bullock: A bit more worried about the inflation impact from supply shocks

The Gaza Strip conflict continues to escalate after a rocket attack on a hospital in Gaza killed over 500 civilians, and both Israel and Hamas have exchanged accusatory barbs for the building explosion.

The US Congress remains hamstrung after two votes in as many days failed to establish a new Speaker of the House after previous Speaker Kevin McCarthy was dumped from the position by his own Republican party. Gridlock on selecting a new Speaker after two weeks of Congressional inactivity on governance duties sees investors concerned that the US could be racing into yet another funding partisan battle after the last one saw only a temporary stopgap funding measure, which is set to expire in four weeks' time.

US Treasuries are climbing into highs over a decade old, with the 10-year T-note hitting 4.928% on Wednesday, its highest since early 2007.

Forex Today: Gold jumps despite Dollar strength, focus turns to Australian jobs and Powell

Thursday will bring a fresh round of Australian Jobs figures, with the Aussie Unemployment Rate expected to hold at 3.7% for September, while investors will be looking for the Employment Change to add at least 20K jobs for the month, compared to August's 64.9K jobs addition.

On the US side, Initial Jobless Claims are forecast to tick slightly higher, with 212K new claimants expected for the week into October 13th compared to the previous week's 209K.

Federal Reserve (Fed) Chairman Jerome Powell is slated to give a speech later on Thursday. Fed Chair Powell will be delivering talking points at the Economic Club of New York's Luncheon.

AUD/USD Technical Outlook

The Aussie's bearish tip-over on Wednesday reaffirms the AUD/USD's downside bias, with the pair routinely facing rejection from a descending 50-day Simple Moving Average (SMA), which is currently painting into the 0.6400 handle on daily candlesticks.

The Aussie remains firmly in bear country for 2023, trading far below the 200-day SMA near 0.6650.

With the AUD/USD's 2023 lows sitting close by at 0.6285, a bearish continuation will see the pair pushed even deeper into red for the year, and the Aussie is trading into incredibly dark waters, down around 11.5% from the year's highs of 0.7157 set back in February.

AUD/USD Daily Chart

AUD/USD Technical Levels