- AUD/USD rebounds after dropping nearly 150 pips on Thursday.
- Positive market sentiment helps AUD gather strength on Friday.
- US Dollar Index posts modest daily losses, holds above 96.50.
The AUD/USD pair fell sharply on Thursday and stretched lower during the Asian session on Friday to touch its lowest level in ten days at 0.6799. However, the pair staged a rebound ahead of the American session and erased a large portion of its weekly losses. As of writing, AUD/USD was up 0.6% on the day at 0.6895.
Eyes on US consumer confidence data
The sharp drop witnessed in global major equity indexes on Thursday reflected a fresh bout of flight-to-safety and caused the risk-sensitive AUD to weaken against its rivals. Heightened worries over a second coronavirus wave crippling the global economic recovery seem to be weighing on the optimism.
Additionally, the greenback capitalized on the risk-off flows and the US Dollar Index (DXY) rose decisively following Wednesday’s FOMC-inspired sharp drop. Nevertheless, in the absence of significant fundamental drivers, the market sentiment seems to have started to recover on Friday, keeping the DXY’s gains limited. At the moment, the index is down 0.16% on the day at 96.66.
In the second half of the day, the University of Michigan’s Consumer Sentiment Index will be the last key data from the US to keep an eye on. Markets see the confidence to continue to deteriorate slightly in June. A better-than-expected reading could provide a boost to US stocks and help AUD/USD push higher ahead of the weekend.
Technical levels to watch for
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