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Sep 21 - 11:55 PM

AUD/USD - COMMENT-AUD/USD Poised To Fall As Reasons To Sell Pile Up

By John Noonan  —  Sep 21 - 10:20 PM

The Australian dollar is looking vulnerable to a deeper fall after the Federal Reserve's hawkish 75 basis-point rate hike re-ignited the U.S. dollar uptrend nL4N30T04M.

Risk assets fell in the wake of the Fed decision and aggressive rate hike projectionsnL1N30S2U8.
Rising geopolitical pressures due to the escalation of the Russia-Ukraine conflict portend more market volatility nL1N30S1BH. As a risk-sensitive currency, the AUD underperforms when markets are volatile.

The hawkish Fed outlook has also heightened global growth fears, with the U.S. Treasury 2s/10s yield curve inverting further, signalling that the bond market is pricing in a recession nL1N30S2RU.

Weakening global demand will likely continue to weigh on commodity prices and pressure commodity currencies such as the AUD, NZD and CAD.

The AUD/USD has fallen below 0.6600 in Asia Thursday morning, as buyers are hesitant despite recent falls.
There is now no technical support ahead of the 61.8 Fibonacci retracement of the pandemic low-high at 0.6463.

The AUD/USD is trending lower with the 5, 10 and 21-day moving averages aligned in a bearish formation and pointing lower.
Only a break above the 10-DMA at 0.6728 would warn a bottom is forming.

Related comment nL4N30L0IR.
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Refinitiv IFR Research/Market Commentary


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