The pair is down 0.5% today as a more dour risk mood is weighing on commodity currencies while also helping to lift the dollar. The latter is also benefiting from higher Treasury yields, stemming from last week’s breakout move. That is pushing AUD/USD back under 0.6400 again after several failed attempts to hold a push above 0.6500:
AUD/USD daily chart
The pair had largely been consolidating around 0.6360 to 0.6500 as of late and now is starting to wander back towards the lows in that range, which also represent the lows for the year.
There’s not much going in favour of buyers right now and the same headwinds for the aussie in recent months are very much still persisting.
- Rate differentials continue to favour the USD against the AUD, even as the Fed pauses alongside the RBA;
- Higher Treasury yields is crunching equities and weighing on the risk mood, in turn the AUD;
- China worries continue to fester and while the data has improved slightly, they are still suspect and that keeps the AUD in a vulnerable spot to any further downturn in economic conditions there;
- The technical momentum is also still siding with sellers mostly as buyers are not able to firmly break 0.6500 to come up for air in the past few weeks.
But even so, a break below the September lows around 0.6360 will be what sellers need to gather momentum for the next leg lower towards 0.6200 i.e. October 2022 lows.