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MTrading Team • 2023-07-26

AUDUSD fails to cheer US Dollar’s retreat ahead of FOMC as Australia inflation disappoints

AUDUSD fails to cheer US Dollar’s retreat ahead of FOMC as Australia inflation disappoints

The market slip into the typical consolidation mode ahead of the Federal Reserve (Fed) interest rate decision, marking moves versus the US Dollar.

The greenback holds lower grounds after reversing from a two-week high the previous day, which in turn allows commodities and Antipodeans to edge higher.

However, the AUDUSD pair appears an exception as it prints the first daily loss in three due to the disappointing Australian inflation data. Also weighing on the Aussie pair could be the fresh fears about the US-China trade war after the US Senators backed a proposal to push US companies towards registering their China investments. That said, EURUSD remains sidelined but the GBPUSD grinds lower after snapping a seven-day downtrend the previous day.

Prices of Gold remain firmer for the second consecutive day while crude oil struggles at a three-month high, mildly bid of late.

BTCUSD and ETHUSD also remain dicey and reverse the previous day’s corrective bounce from the lowest levels in five and three weeks respectively.

Following are the latest moves of the key assets:

  • Brent oil prints mild gains at the three-month high, up 0.40% intraday near $83.40.
  • Gold price prints two-day uptrend around $1,970 by the press time.
  • USD Index remains pressured near 101.20 after reversing from the highest level in two weeks the previous day.
  • Wall Street benchmarks closed positive but stocks in the Asia-Pacific zone edged lower. That said, equities in Europe and UK trade mixed of late.
  • BTCUSD and ETHUSD print minor losses around $29,200 and $1,850 after a slump to multi-day lows.
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Mixed markets challenge traders but AUDUSD drops

Pre-Fed anxiety joins the previous day’s upbeat US data and the fresh fears about Sino-American ties but failed to impress the US Dollar buyers as markets prepare for a dovish Fed outcome. Even so, Fed Chairman Jerome Powell isn’t famous for being dovish and hence fears that he could surprise markets by ruling out policy pivot chatters to keep the traders on the edge.

Elsewhere, Australia’s headline inflation numbers, be it quarterly or monthly, printed downbeat figures and justifies the RBA’s latest stop in hiking the interest rates, which in turn joined the anti-China headlines to weigh on the AUDUSD. It should be observed that fears of the UK recession keep the GBPUSD bears hopeful even if the US Dollar remains dicey of late.

EURUSD buyers stay hopeful as ECB policymakers were hawkish in their last statements, ignoring the fact that the markets put heavy bets on the European Central Bank’s pause to rate hike trajectory after July.

On a different page, Twitter’s revamp fails to impress BTCUSD and ETHUSD buyers as the US policymakers brace for harsh measures to regulate these volatile assets.

  • Strong buy: USDCAD
  • Strong sell: ETHUSD, GBPUSD, Gold
  • Buy: USD Index, Nasdaq, USDJPY

All eyes on Fed

Although the Fed’s 0.25% rate hike is mostly priced in, traders are more interested in knowing the future moves of the US central bank as the policy pivot talks gained momentum of late. As a result, Fed Chairman Jerome Powell’s speech will be crucial to watch. Should Powell manages to defend hawks, by suggesting more rate hikes, the US Dollar could regain upside momentum, which in turn will exert downside pressure on the commodities, Antipodeans and other riskier assets like equities and cryptos.

May the trading luck be with you!