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AUD/USD struggles to surpass the 0.6350 barrier; Australian Inflation/US GDP in the spotlight
AUD/USD has encountered resistance near 0.6350 because to China's Jinping-inspired pessimism. A fourth consecutive rate hike of 75 basis points by the Fed appears likely. As US Yellen stated that a recession cannot be ruled out, fears of a downturn in the US economy have grown.
During the Tokyo session, the AUD/USD pair surrendered its drop to trade near 0.6350. The Australian dollar is under pressure from the pessimism Jinping instilled in China. Despite a modest drop in S&P500 futures following consecutive bullish settlements, the risk-on impetus remains robust. After a lackluster Tokyo opening, the US dollar index (DXY) is striving to reclaim the crucial 112.00 level.
The yield on the 10-year US Treasury note has decreased to 4.21 percent due to a favorable market attitude. According to the CME FedWatch tool, the probability of a fourth straight 75 basis point (bps) rate hike by the Federal Reserve (Fed) stands at 95%.
According to a Reuters poll about the Fed's interest rate forecasts, the central bank will announce a fourth consecutive 75 basis point rate hike. According to other results of the Reuters poll, the central bank should not stop monetary policy until inflation falls to roughly half of its current level. There is no doubt that the Fed's aggressive rate-hiking cycle is also encouraging the likelihood of a future recession.
MSNBC news claimed that US Treasury Chief Janet Yellen stated, "Cannot rule out risk" of a recession, causing fears of a recession to increase dramatically.
In the future, Thursday's Gross Domestic Product (GDP) numbers will dominate the news. The annualized GDP is anticipated to increase significantly to 2.4% from the previously estimated 0.6% drop.
On the Australian front, China's leader XI Jinping's unprecedented third term has rocked the Aussie bulls. China's growth prospects are at risk, which impacts Australia's trade forecasts. In addition, Australian Consumer Price Index (CPI) data is gaining ground. According to forecasts, yearly headline inflation will increase to 7.0% from 6.1% in the previous release.
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