- AUD/USD has sensed barricades around 0.6750 as the US Dollar Index has also attempted a recovery.
- A sheer decline in the US International deficit displays the impact of the Fed’s tight monetary policy.
- Scrapping of quarantine rules for inbound travelers in China will ease supply chain disruptions.
The AUD/USD pair is facing pressure in overstepping the critical resistance of 0.6750 in the Tokyo session. Earlier, the Aussie asset displayed a recovery after dropping to near 0.6720. The major is needed to surpass the 0.6750 hurdle to extend its recovery, however, a recovery in the US Dollar index (DXY) is dampening optimism in the antipodean.
The US Dollar index has recaptured the crucial resistance of 104.00 and is expected to re-test the two-day high around 104.20 as the festive mood is inspiring volatility in the global market. Anxiety among market participants is forcing them to hide behind the safe-haven. Therefore, the risk aversion theme is gaining more traction.
Meanwhile, S&P500 futures have attempted a rebound move after a weak Tuesday. It would be early to call the rebound move in the 500-stock basket a reversal as the recovery move is less confident amid the unavailability of a potential trigger. The 10-year US Treasury yields have trimmed marginally but are still near 3.85%.
On Tuesday, the release of the decline in the United States International Trade Deficit, reported by the Census Bureau, is reflecting the consequences of extremely hawkish monetary policy by the Federal Reserve (Fed). Exports of goods for November were $168.9 billion, $5.3 billion less than October exports while Imports of goods for November were $252.2 billion, $20.8 billion less than October imports, which indicates a decline in economic activities as firms are dodging debt due to higher interest obligations.
On the Aussie front, reopening measures by China to regain the path of progress is not supporting well to the Australian Dollar. Chinese administration has scrapped quarantine rules for inbound travelers to ease supply chain disruptions. Being a leading trading partner of China, Australia will be benefitted from the relaxation of Covid-19 restrictions.