AUD/USD struggles for a firm direction, flat-lines above mid-0.6600s ahead of FOMC – by hareshmenghani AUDUSD RBA Fed RiskAppetite Currencies
The Australian Dollar continues to draw some support from the Reserve Bank of Australia's surprise 25 bps rate hike on Tuesday and a more hawkish outlook. This, along with the ongoing US Dollar retracement slide from a three-week high touched the previous day, acts as a tailwind for the AUD/USD pair. The overnight release of the US Job Openings and Labor Turnover Survey indicated that the ultra-tight US job market is loosening.
Apart from this, a modest recovery in the US equity futures undermines the safe-haven buck and benefits the risk-sensitive. The upside for the AUD/USD pair, however, remains capped as traders seem reluctant to place aggressive bets ahead of the highly-anticipated FOMC monetary policy decision, due to be announced later during the US session. The Federal Reserve is widely expected to hike
by 25 bps, though investors seem divided over the possibility that the Fed will announce a pause in its rate-hiking cycle as inflation is still trending well above the central bank's target range.Chair Jerome Powell's comments at the post-meeting press conference, which will be scrutinized for clues about the future rate-hike path. This, in turn, will play a key role in influencing the near-term USD price dynamics and provide some meaningful impetus to the AUD/USD pair.
- featuring the release of the ADP report on private-sector employment and the ISM Services PMI - to grab short-term opportunities.
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