AUD/USD got weekly losses, on Fed’s hawkish language

Last week’s inflation data in the United States boosted the US dollar’s recovery as US Treasury bond yields aimed higher. The AUD/USD pair is eyeing the busy economic calendar in Australia and the US next week.

The Australian dollar finished the week with negative performance after hitting a daily high of 0.6884, dropped on a risk-off impulse, as Wall Street ended the session with losses between 0.26% and 0.58%, while the Dow Jones was the outlier, finishing 0.39% above its opening price. At the time of writing, the AUD/USD exchanges hands at 0.6877

Global stocks finished negatively as investors increased their bets that the US Fed will tighten policy above earlier expectations. Last week’s January inflation reports for CPI and PPI data were lower compared to December’s data but above estimates.

On Friday, Fed’s Michell Bowman stated that the US central bank has not finished tightening monetary conditions and reiterated that “we haven’t beaten inflation.” Meanwhile, Richmond’s Fed President Thomas Barkin said that getting inflation back to the Fed’s 2% goal “will require more rate increases.”

In the Asian session, the RBA Governor Philipe Lowe said that based on incoming data, the RBA board estimates that additional rate increases will be needed “over the months ahead to ensure that inflation returns to target and that this period of high inflation is only temporary.”

Given the backdrop and worse than estimates Australian labour market date revealed on Wednesday, the US Dollar (USD) regained composure and weighed on the Australian dollar. The AUD/USD pair tumbled from around 0.6989 toward the week’s lows at 0.6811.