- AUD/USD remains on the back foot near the weekly low.
- RBA’s Kent cites the central bank’s policy moves to tame the AUD upside.
- Aussie Westpac Leading Index grew 0.26% in January.
- Risks consolidate after Tuesday’s stellar moves, US data, FOMC minutes will decorate the calendar.
AUD/USD extends the previous day’s losses toward the intraday low near 0.7730 during Wednesday’s Asian session. The quote recently declined following comments from the RBA Assistant Governor (Financial Markets) Christopher Kent. Earlier in the day, US dollar strength kept the quote depressed for the second consecutive day.
Reserve Bank of Australia’s (RBA) Kent highlights the Australian dollar strength and hints at further measures to tame it for the betterment of the export-driven economy. In doing so, the policymaker also praised the latest extension of the Quantitative Easing (QE).
Read: RBA’s Assistant Governor Kent: RBA to make modest changes to how it uses FX swaps
During early Asia, Westpac Leading Index for Australia rose past-0.12% to 0.26% in January. However, the US dollar gains, mainly taking clues from the one-year high US Treasury yields, keep the AUD/USD buyers away.
That said, the market sentiment recently eased with the pullback in the US stock futures and 10-year Treasury yields from the latest tops. In Australia, the ASX 200 also declines 0.70% even as the New South Wales (NSW) eyes rolling out vaccines from Monday.
On a broader front, US President Joe Biden is up for rolling out the much-awaited stimulus as Congress is finally done with Donald Trump’s impeachment. Also favoring the mood could be the jump in vaccinations in Western countries and receding virus infections.
However, the US-China tension joins the Washington-Tehran tussle and fears of the covid strain to challenge the optimism.
Other than the risk catalysts that are likely to keep the US treasury yields up and weigh on the AUD/USD, US Retail Sales for January are also expected to keep the sellers happy. However, FOMC minutes may challenge the mood, if conveying downbeat economic forecasts.
Read: US Retail Sales January Preview: Credit markets foresee consumer recovery
Technical analysis
21-day SMA and the January-end tops highlight the 0.7700 as the key support for AUD/USD traders. Meanwhile, the 0.7806 and the yearly top of 0.7820 can challenge the pair’s short-term recoveries.
Share
