- AUD/USD eases from the post-FOMC top of 0.7065, also the fresh high since July 2019.
- US Federal Reserve maintained a dovish tone with downbeat forecasts/projections joining no rate change.
- China’s inflation numbers, Aussie Westpac Consumer Confidence flashed soft data.
- Australia’s Consumer Inflation Expectations and the US-China can entertain traders amid a light calendar.
AUD/USD tries to settle around 0.7000 at the start of Thursday’s Asian session. The US central bank action, actually inaction, propelled the Aussie pair to refresh the multi-day high to 0.7065 before a few hours. However, the recent consolidation seems to drag the quote back to normal.
Fed shows readiness to act, cuts economic forecasts and rate projections….
Jerome Powell and company manage to strike a balance between holding the current aids and also portraying a not so bleak future outlook. The Fed did not announce any rate change while cutting the inflation and GDP forecasts. The US monetary policymakers also anticipate the rates to stay unchanged until 2022. Though, Chairman Jerome Powell showed openness about using the yield curve control (YCC) if needed in the future.
The event offered enough of US dollar weakness to please the rest of the currency majors, especially Antipodeans. However, the mood seems to fizzle off-late despite US President Donald Trump praising the Federal Reserve.
It should also be noted that the Organization for Economic Co-operation and Development (OECD) also released its latest June Economic Projections Report on Wednesday. The global organization cited a risk of the coronavirus (COVID-19) second wave while anticipating a 7.6% fall in global GDP if that happens. Additionally, Inflation data from the US and China, as well as Australia’s Westpac Consumer Confidence, also marked weak outcomes.
Against this backdrop, the US 10-year Treasury yields drop over nine basis points (bps) to the lowest in over a week to 0.736%. Elsewhere, Wall Street benchmarks posted mixed closings despite initial run-up.
Looking forward, traders might have to rely on the news headlines for fresh impetus amid a light calendar in Asia. Nonetheless, Aussie Consumer Inflation Expectations for June, expected 4.2% from 3.4% prior, might offer intermediate moves.
Technical analysis
Despite the pair’s limited capacity to stay above 0.7000, it remains in the vicinity of five-month tops off-late. Also, the quote’s ability to keep the bulls happy beyond 200-day SMA speaks loud of the Aussie pair’s price strength.
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