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  • US Dollar Index erases part of early rally, returns to mid-99s.
  • Markets remain risk-averse with US stocks suffering heavy losses.
  • Coming up: Employment Change and Consumer Inflation Expectations from Australia.

After breaking below the 0.6400 handle during the European trading hours, the AUD/USD pair extended its daily slide and fell to a daily low of 0.6285 pressured by the broad-based USD strength and a dismal market mood. Although the pair staged a technical rebound and advanced to 0.6330 area, it’s still losing 1.6%, or around 100 pips, on the day.

DXY gains traction

Risk-aversion on Wednesday provided a boost to the safe-haven USD. The US Dollar Index, which gauges the greenback’s performance against a basket of six major currencies, tested the 100 mark during the American session and was last seen adding 0.7% on the day at 99.55.

The data from the US showed that Retail Sales in March declined by 8.7% on a monthly basis and Industrial Production contracted by 5.4%. Wall Street’s main indexes opened the day deep in the negative territory on disappointing data and allowed the USD to continue to find demand.

During the Asian session on Thursday, Consumer Inflation Expectations and Employment Change data from Australia will be looked upon for fresh impetus. Markets expect a 40K drop in payrolls and see the unemployment rate rising to 5.5% in March from 5.1% in February.

Technical levels to watch for