AUD/USD struggles around 0.7200 and nosedived below 0.7100 as bears eye 0.7000 By christianborjon AUDUSD Majors Macroeconomics Technical Analysis
meetings. At the time of writing, the AUD/USD is trading at 0.7069.Risk-aversion rules April’s last trading day, as portrayed by USset to record losses between 2.32% and 4.09%. Factors like China’s covid outbreak, Federal Reserve tightening, and the Russia-Ukraine war developments weighed on market sentiment.
On Friday, the Fed’s favorite inflation gauge, the core Personal Consumption Expenditures , rose to 5.2% y/y, lower than the 5.3% estimations. However, headline inflation expanded by 6.6% y/y, from 6.3% in the previous month. The data further strengthens the case for a Federal Reserve rate hike in the next week, as the US central bank chief Jerome Powell expressed during the month that a 50-bps increase is “on the table.
Hotter than expected inflationary readings reported during the week on the Australian front paint a problematic scenario for the Reserve Bank of Australia as a federal election looms on May 16. Money market futures odds of a 0.25 bps increase by the RBA sit at an 85% chance, though some analysts were expecting a 40-bps rate hike.unchanged. However, according to Bloomberg, Goldman Sachs Group, Inc. sees the RBA delivering a 40-bps move in June.
Therefore, the AUD/USD scenario favors the greenback. But, a higher-than-expected RBA rate increase or a “dovish” Federal Reserve would boost the prospects of the AUD, though it’s unlikely to happen.
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