A combination of factors assisted AUD\/USD to gain strong positive traction on Wednesday. Hawkish RBA minutes extended support to the aussie amid a sharp USD corrective pullback. Bets for aggressive Fed rate hikes should limit the USD losses and cap the upside for the pair.
The AUD\/USD pair maintained its bid tone through the early North American session and was last seen trading around the 0.7430 region, just a few pips below the weekly high.
The Reserve Bank of Australia (RBA), through its minutes from the April Board meeting, sent a hawkish message and provided a strong hint that a rate hike is coming sooner than expected. The RBA said that quicker inflation and a pickup in wages growth have moved up the likely timing of the first interest-rate increase since 2010. This, in turn, acted as a tailwind for the Australian dollar, which, along with broad-based US dollar weakness, assisted the AUD\/USD pair to gain strong positive traction on Wednesday.
A sharp corrective slide in the USD\/JPY pair and a softer tone surrounding the US Treasury bond yields prompted some USD profit-taking following the recent runup to the highest level since March 2020. Apart from this, the risk-on impulse – as depicted by the strong opening in the US equity markets – further underpinned demand for the safe-haven greenback and benefitted the perceived riskier aussie. The combination of factors pushed the AUD\/USD pair beyond the 0.7400 mark, further away from the one-month low touched on Tuesday.
It, however, remains to be seen if bulls are able to capitalize on the move amid expectations for a more aggressive policy tightening by the Fed. In fact, the markets seem convinced that the Fed would raise interest rates at a faster pace to curb soaring inflation and have been pricing in multiple 50 bps hikes.
This should act as a tailwind for the US bond yields, which supports prospects for the emergence of some USD dip-buying. Hence, it will be prudent to wait for strong follow-through buying before positioning for a further appreciating move for the AUD\/USD pair and confirming that the recent corrective slide from the YTD peak has run its course.<\/p>\n","protected":false},"excerpt":{"rendered":"
A combination of factors assisted AUD\/USD to gain strong positive traction on Wednesday. Hawkish RBA minutes extended support to the aussie amid a sharp USD corrective pullback. Bets for aggressive Fed rate hikes should limit the USD losses and cap the upside for the pair.The AUD\/USD pair maintained its bid tone through the early North …<\/p>\n","protected":false},"author":13,"featured_media":32839,"comment_status":"closed","ping_status":"closed","sticky":false,"template":"","format":"standard","meta":{"_monsterinsights_skip_tracking":false,"_monsterinsights_sitenote_active":false,"_monsterinsights_sitenote_note":"","_monsterinsights_sitenote_category":0,"footnotes":""},"categories":[37,36],"tags":[7036,7035,6984],"class_list":["post-64177","post","type-post","status-publish","format-standard","has-post-thumbnail","","category-forex-markets","category-market-updates","tag-aud","tag-rba","tag-treasury-yields"],"_links":{"self":[{"href":"https:\/\/noortrends.ae\/en\/wp-json\/wp\/v2\/posts\/64177","targetHints":{"allow":["GET"]}}],"collection":[{"href":"https:\/\/noortrends.ae\/en\/wp-json\/wp\/v2\/posts"}],"about":[{"href":"https:\/\/noortrends.ae\/en\/wp-json\/wp\/v2\/types\/post"}],"author":[{"embeddable":true,"href":"https:\/\/noortrends.ae\/en\/wp-json\/wp\/v2\/users\/13"}],"replies":[{"embeddable":true,"href":"https:\/\/noortrends.ae\/en\/wp-json\/wp\/v2\/comments?post=64177"}],"version-history":[{"count":2,"href":"https:\/\/noortrends.ae\/en\/wp-json\/wp\/v2\/posts\/64177\/revisions"}],"predecessor-version":[{"id":64184,"href":"https:\/\/noortrends.ae\/en\/wp-json\/wp\/v2\/posts\/64177\/revisions\/64184"}],"wp:featuredmedia":[{"embeddable":true,"href":"https:\/\/noortrends.ae\/en\/wp-json\/wp\/v2\/media\/32839"}],"wp:attachment":[{"href":"https:\/\/noortrends.ae\/en\/wp-json\/wp\/v2\/media?parent=64177"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/noortrends.ae\/en\/wp-json\/wp\/v2\/categories?post=64177"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/noortrends.ae\/en\/wp-json\/wp\/v2\/tags?post=64177"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}