- AUD/USD has dipped back near the 0.7500 level as the US dollar strengthens after the release of the Fed minutes.
- That means the pair is now down more than 1.0% on the day, with stocks bearish and commodity prices weighing on their men.
The US dollar is rising on the heels of the release of the latest Fed Meeting Minutes and this has led to the AUD/USD to fresh session lows below the 0.7500 level. That means the pair is now trading down more than 1.0% on the day as it had already been under pressure before the release of the Fed Minutes, likely as a result of the sharp pullback seen in global markets. of stocks and raw materials. The Australian dollar is highly correlated with both risk appetite and commodity prices such as oil, copper, and other energy and metal prices.
With the Aussie now trading back in the 0.7500 area, it has more than undone the gains following Tuesday’s RBA meeting that saw it at one point rally as high as 0.7660 on Tuesday. That’s a drop of about 2.0% from the weekly highs. Now that AUD/USD is trading back into last week’s ranges (when it spent virtually all week within 40 pips of the 0.7500 level), longer-term Aussie bulls will be wondering if they want to buy dips. .
Although still substantially higher compared to the mid-March lows, the pullback of the past two days in US and global stock markets does not look healthy. If global yields continue to rise on central bank tightening expectations, that does not bode well for a recovery back to last week’s highs. That would bode badly for the highly risk-sensitive Australian dollar, and good for the safe-haven US dollar. Much will depend on whether commodity traders accept the drop as oil now approaches key support.
Technical levels
Source: Fx Street
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