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  • AUD/USD dropped below 0.7100 ahead of the American session.
  • US Dollar Index rose to highest level in nine days near 93.50.
  • Wall Street’s main indexes look to open sharply lower on Wednesday.

The AUD/USD pair rose above 0.7150 earlier in the day but made a sharp U-turn ahead of the American session and slumped to its lowest level in a week at 0.7073. As of writing, the pair was down 0.7% on the day at 0.7078.

Earlier in the day, the data published by the Reserve Bank of Australia (RBA) showed that the Trimmed Mean Consumer Price Index (CPI) in the third quarter rose to 0.4% on a quarterly basis from -0.1%. Although this reading helped the AUD stay resilient against its rivals during the first half of the day, the risk-averse market environment forced AUD/USD to turn south.

DXY edges higher ahead of Wall Street’s opening bell

The US Dollar Index (DXY), which closed the first two days of the week in the positive territory, continues to push higher on Wednesday and is currently gaining 0.4% at 93.46, a little below the nine-day high it set at 93.50.

The surging number of coronavirus infections in Europe and the lack of progress in stimulus talks in the US continue to weigh on market sentiment. Reflecting the dismal market mood, the S&P 500 futures are down 1.4% on the day, suggesting that Wall Street is likely to open deep in the negative territory. If safe-haven flows dominate the financial markets in the second half of the day, the USD could gather further strength and cause AUD/USD to extend its slide.

The only data featured in the US economic docket will be September Trade Balance on Wednesday. During the Asian session on Thursday, the National Australia Bank’s (NAB) Business Confidence Index will be looked upon for fresh impetus.

Technical levels to watch for