AUD/USD: dollar weakness prevails and headed to 0.7550 near term?
Currently, AUD/USD is trading at 0.7460, down -0.08% on the day, having posted a daily high at 0.7472 and low at 0.7457.
AUD/USD is consolidating the minor recovery from the 0.7420 area, testing 0.7470, a previous resistance in May. this too is where the 4hr 200 EMA at 0.7468. The Aussie is gaining traction on continued softness in the greenback. Markets wonder whether the Fed is in a position to hike rates incrementally throughout the year after June.
Fed's Brainard: Another U.S. rate hike likely appropriate soon
The June hike, having said that, is still not a 100% cert and today's Fed chat from Fed Governor Lael Brainard warns that the Fed might want to delay rate hikes if inflation continues to slow with the lack of progress in the inflation goal is 'a source of concern'.
Sentiment towards the USD remains poor - ANZ
For today and domestically, April private sector credit is expected by Westpac to grow 0.4%, supported by a small rise in business after Q1’s 0.5% drop, as explained analysts at Westpac who added, "Housing is expected to grow 0.55% again, ahead of a coming slowdown due to tighter lending conditions." Meanwhile, China offers NBS manufacturing PMI and services PMI as a further potential catalyst.
AUD/USD levels
Near term, the analysts at Westpac explained the Aussie is bounded by 0.7330 and 0.7515 near term, with a hint of positivity for the day ahead. Further out, the resilience of US equity markets to the distractions of the Trump administration is a positive backdrop for risk-sensitive AUD," the analysts pointed out, adding, "Chinese markets are of course less helpful as the deleveraging push continues, but the uptrend in steel prices suggests potential for recovery in iron ore prices. The rebound in Australian job creation keeps RBA rate cut talk at bay. This leaves scope for tests of AUD/USD 0.7550 near term. But multi-month, we expect the ongoing rise in US interest rates to chip away at AUD/USD, leaving it around 0.73 by Q3."