- AUD/USD turned south after staging a modest rebound in early European session.
- US Dollar Index builds on Tuesday’s gains, approaches 91.00.
- Retail Sales, Industrial Production data and FOMC Minutes highlight US economic docket.
The AUD/USD pair advanced beyond 0.7800 for the first time in nearly a month on Tuesday but ended up closing the day in the negative territory amid renewed USD strength. On Wednesday, the pair is having a difficult time staging a meaningful rebound and was last seen losing 0.22% on the day at 0.7740.
USD capitalizes on safe-haven flows
On Wednesday, the dismal market mood is making it difficult for the risk-sensitive AUD to find demand, while helping the USD preserve its strength. The US Dollar Index is currently rising 0.37% on the day at 90.84. Earlier in the day, the Westpac Leading Index in Australia improved to 0.26% in January from 0.12% but failed to provide a boost to AUD/USD.
Later in the session, the US Census Bureau’s January Retail Sales report will be looked upon for fresh impetus. Investors expect Retail Sales to increase by 1% after declining 0.7% in December. Additionally, the US Federal Reserve will publish the Industrial Production and Capacity Utilization figures. Finally, the FOMC will release the February Meeting Minutes.
Nevertheless, the market reaction to these events is likely to remain short-lived and the risk perception could remain the primary driver of the USD’s valuation in the second half of the day. At the moment, the S&P 500 Futures are posting small daily losses and a rebound in Wall Street’s main indexes could weigh on the USD and vice versa.
In the early trading hours of the Asian session on Thursday, Australian jobs report will be watched closely by market particioants.
Technical levels to watch for
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