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  • Trump said there is a good chance to make a deal with China.
  • Recovering United States (US) Treasury bond yields support the USD.
  • US Dollar Index looks to close the day near the 0.99 handle.

The AUD/USD pair failed to build on this week’s gains and slumped to its lowest level in three weeks at 0.6740 on Wednesday. With the trading action turning subdued in the last few hours, the pair has gone into a consolidation phase and was last seen trading at 0.6757, erasing 0.63% on a daily basis.

The USD gathers strength on surging Treasury bond yields

The Greenback’s strong performance seems to be the primary reason behind the bearish pressure surrounding the pair. The US Dollar Index (DXY) gained traction during the American trading hours and advanced to its highest level since early September at 99.06.

In the absence of significant macroeconomic data releases from the United States (US), the sharp upsurge witnessed in the US Treasury bond yields provided a boost to the USD. While speaking to reporters in New York, US President Donald Trump said that there was a good chance that they will make a trade deal with China to ease concerns over a protracted conflict with China. Furthermore, Trump announced the details of the trade that they have reached with Japan to allow risk-on flows to take control of the market action.

The 10-year US T-bond yield, which closed the previous seven trading days in the negative territory, staged a decisive recovery and was last up 4.8% on the day.

The Australian economic docket won’t be offering any data in the remainder of the week and the USD’s market valuation is likely to continue to drive the pair’s action.

Technical levels to watch for