- AUD/USD turned south after closing in the positive territory on Tuesday.
- US Dollar Index rises above 90.50 supported by risk-off flows.
- Investors await FOMC’s policy announcements, US Durable Goods Orders data.
The AUD/USD pair stayed relatively quiet below 0.7750 during the Asian trading hours but came under strong bearish pressure ahead of the American session. As of writing, the pair was down 0.7% on the day at 0.7690.
USD capitalizes on safe-haven flows
The dismal market mood on Wednesday is helping the safe-haven greenback outperform its rivals. The US Dollar Index, which closed in the negative territory on Tuesday, is currently up 0.44% at 90.55. Reflecting the risk-averse market environment, the S&P 500 Futures are down 1.3% on the day, suggesting that Wall Street’s main indexes will start the day deep in the red.
The US Census Bureau will publish the Durable Goods orders data for December. More importantly, the FOMC will announce its rate decision and publish the policy statement following the first meeting of 2021.
Previewing the FOMC event, “we expect changes to the FOMC statement to be fairly minor, consistent with no plans for policy changes anytime soon,” said TD Securities analysts. “The chairman will likely remain dovish on the policy outlook in his press conference even as he expresses some optimism about growth in the year ahead—with vaccines and fiscal stimulus ultimately contributing to strength.”
Earlier in the day, the data from Australia showed that the Consumer Price Index (CPI) declined to 0.9% in the fourth quarter from 1.6%. Although this reading came in slightly higher than the market expectation of 0.7%, it failed to trigger a significant market reaction.
Technical levels to watch for
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