- The overnight rebound from 1-1/2 week lows turned out to be short-lived.
- Dismal domestic data prompts some fresh selling around the Aussie Dollar.
- The focus remains firmly on Wednesday’s highly anticipated FOMC decision.
The AUD/USD pair failed to capitalize on the overnight late rebound from 1-1/2 week lows and came under some renewed selling pressure on Wednesday.
The pair on Tuesday reversed an early dip to an intraday low level of 0.6831 amid some renewed selling bias surrounding the US Dollar. The perceived riskier currency – Aussie – got an additional boost from improving risk sentiment after Saudi Arabia’s energy minister said the kingdom has tapped inventories to restore oil supplies.
Dismal Aussie weigh ahead of the Fed
The pair finally settled near the top end of its daily trading range, around the 0.6865-70 region, but lacked any strong follow-through, rather met with some fresh supply during the Asian session on Wednesday following the disappointing release of Melbourne Institute’s Leading Index, which predicts the direction of the economy.
The forward-looking indicator fell to -0.30% in August from an upwardly revised reading of 0.2% in July and indicated that the Australian economy will continue to operate at a below-trend growth pace into late 2019 and early 2020, which eventually turned out to be one of the key factors exerting some downward pressure on the major.
Meanwhile, the greenback held steady and did little to influence the price action as the focus remains firmly on the highly anticipated FOMC decision, scheduled to be announced later this Wednesday. Given that a 25 bps rate cut is largely priced in, investors will closely scrutinize the accompanying policy statement and updated economic projections.
This will be followed by the post-meeting press conference, where comments by the Fed Chair Jerome Powell will play a key role in influencing the market expectations for any further policy easing and eventually help determine the pair’s next leg of a directional move.
Technical levels to watch
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