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Thomson Reuters
May 23 - 02:36 PM
AUD/USD - COMMENT-Yuan, Fed Expectations Temper AUD/USD Bears
First appeared on eFXplus on May 23 - 12:20 PM

AUD/USD bears might be having a rethink after failing in their latest attempt to crack support at last week's low of 0.6865.
Downbeat euro zone data and ECB concerns about growth fueled concerns that global growth remains anemic.
Heightened U.S.-Sino trade tensions bolstered growth concerns.
Global bond yields dived on those worries, helping push AUD/USD lower, but other cross currents are now at play.
A PBOC paper saying the bank is able and confident in keeping yuan stable drove USD/CNH down near 6.9250.
Downbeat U.S. economic data nN9N21F00Z nLNSNGEF47 sent U.S. Treasury yields spiraling lower .
The U.S. yield drop outpaced the slide in Australian yields, tightening Australian-U.S.
spreads.
The U.S. data also resulted in sharp price rallies for eurodollar EDH0 and fed funds FFZ9 futures, suggesting increased odds of Fed rate cuts.
With better chances for Fed rate cuts investors are less attracted to the greenback.
As a result AUD/USD bears have taken a step back and the pair is rallying.
Daily technicals signal a potential bounce, with RSI biased up after diverging.
Bulls still hold the upper hand and only a move above 0.7000 might give bulls some comfort.

chart: Click here

Source:
Thomson Reuters IFR Markets

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