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AUDUSD oscillates near 0.6670 support as stronger Treasury yields support US Dollar recovery
AUDUSD is anticipating its first weekly loss in five weeks and has been inactive of late. US Treasury rates and the US Dollar were boosted by the Fed's hawkish language and risk aversion. China and Russia-related headlines throw more downward pressure on the Australian dollar. Inconsistent US statistics and a stronger Australian employment report failed to please buyers.
AUDUSD treads water at 0.6690 after a two-day slump as bears hunt additional clues to snap a four-week upswing. However, a light calendar on Friday poses a challenge for sellers of the Australian dollar during the Asian session. Nonetheless, the US Dollar's recovery, bolstered by higher Treasury yields, combines with the market's negative attitude to keep pair sellers optimistic.
US Dollar Index (DXY) looks a recovery from the three-month low established earlier in the week on lately aggressive statements from the US Federal Reserve (Fed) officials, as well as better top-tier statistics from the United States. In doing so, the dollar disregards Thursday's inconsistent secondary statistics.
October's robust Retail Sales and Producer Price Index (PPI) figures appeared to favor Fed hawks. However, James Bullard, president of the Federal Reserve Bank of St. Louis, stated on Thursday that the US Federal Reserve's (Fed) monetary policy is not currently considered to be sufficiently restrictive to cut inflation. Neel Kashkari, president of the Minneapolis Federal Reserve Bank, made his most recent remarks on the same line. "With inflation still high and monetary policy tightening already in the works, it is unknown how high the US central bank will have to hike its policy rate," said Kashkari of the Federal Reserve.
Talking about the statistics, US Philadelphia Fed Manufacturing Index decreased to -19.4 versus -6.2 market predictions and -8.7 before. Further, Housing Starts sank by 4.2% MoM in October following September's 1.3% contraction and Building Permits fell by 2.4%, compared to a 1.4% gain recorded in the previous month. Additionally, the Jobless Claims fell to 222K for the week ended on November 11 versus 225K expected and upwardly revised 226K before.
At home, Australia’s Employment Change surged by 32.2K versus 15K market predictions and 0.9K earlier but the Unemployment Rate declined to 3.4% from 3.5% previous readings and 3.6% predicted. Especially following the publication of the robust Wage Price Index, the employment figures received an added advantage to attract purchasers. However, previous dovish comments from Reserve Bank of Australia (RBA) officials seems to have kept AUDUSD buyers on the board.
In addition, heightened tensions between Russia and Ukraine as a result of missile strikes on Poland and rising Covid counts in China weighed on market mood and the risk-barometer pair.
Wall Street closed in the red, reflecting the sentiment, while 10-year Treasury yields rebounded from a six-week low.
A lack of important data/events may allow bears to catch their breath, but the risk-averse sentiment and hawkish Fed concerns may push the AUDUSD price near the weekly loss.
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