AUD/USD reclaimed 0.6970 on weaker US dollar

The market’s risk-on impulse favoured risk sensitive currencies including the NZD, CAD, NOK, SEK and of course the Australian Dollar. The US housing market continues to deteriorate, as shown by declining Existing Home Sales.

Fed’s policymakers favour a deceleration of rate hikes, though the higher-for-longer stance remains unchanged. The AUD/USD pair edged higher in the mid-US session on Friday, following the Thursday’s weak employment report in Australia that triggered a fall below 0.6900.

On Friday, the pair has got a different story, with the AUD/USD recovering some ground while the US dollar is pairing its earlier gains. At the time of writing, the AUD/USD is trading at 0.69727, above its opening price by 0.91%.

AUD/USD climbed, underpinned by the market’s positive mood as well as the weaker US dollar. Wall Street continues to reflect the prevalent positive market sentiment. US data reflects declining trends, as Existing Home Sales for December fell 1.5%, its lowest level since November 2010, according to the National Association of Realtors.

December was another difficult month for buyers, who continue to face limited inventory and high mortgage rates,” said NAR Chief Economist Lawrence Yun. “However, expect sales to pick up again soon since mortgage rates have markedly declined after peaking late last year.”

The US Dollar Index prints minimal gains of 0.06%, at 102.123, after hitting a daily high of 102.552. Contrarily, US Treasury yields advance, with the 10-year benchmark note rate up nine bps, at 3.488%.

Fed official Patrick Harker opened the door for a downshift in interest rate increases, saying, “Hikes of 25 basis points will be appropriate going forward.” He expects the US economy to grow by 1% and the unemployment rate to jump to 4.5% from 3.5%. Later, Fed’s Esther George said that the Federal Reserve must be “patient” to see if inflation in the services sector is easing.