AUD/USD remains depressed around mid-0.6600s, just above two-week low on stronger USD – by hareshmenghani AUDUSD Fed Recession Majors Currencies
pean session. Spot prices, however, trim a part of intraday losses and now trade with a mild negative bias, just below mid-0.6600s.
The US Dollar climbs to a nearly two-month high amid hawkish Federal Reserve expectations and turns out to be a key factor weighing on the AUD/USD pair. In fact, Cleveland Fed President Loretta Mester said on Tuesday that interest rates are not at a sufficiently restrictive level and that the central bank isn't at the spot to hold rates yet. This further fuels speculations that the US central bank will keep interest rates higher for longer and continues to underpin the Greenback.
That said, a modest downtick in the US Treasury bond yields might hold back the USD bulls from placing aggressive bets. Apart from this, a generally positive tone around the equity markets could cap gains for the safe-haven buck and lend some support to the risk-sensitive Aussie. Any meaningful recovery, however, still seems elusive amid worries about a deeper global economic slowdown, warranting some caution before confirming that a one-week-old downtrend has run its course.
The softer Chinese macro data released on Tuesday pointed to a wobbly post-COVID recovery in the world's second-largest economy. This comes on the back of a standoff to raise the federal government's borrowing limit and fuels recession fears. In fact, the Wall Street Journal reports that House Democrats will begin collecting signatures Wednesday for a discharge petition to raise the debt ceiling, in a desperate attempt to circumvent House Republican leadership and force a vote.
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