AUD/USD Rises as USD Retreats Amid Yield Pullback, Awaiting US Data

EnclaveFX Ltd
Sep 22, 2023

The AUD/USD currency pair has managed to break free from a two-day losing streak, trading on a positive note near 0.6440 during the European session on Friday. This upward movement in the pair can be attributed, in part, to a retracement in the US Dollar (USD), which is easing from its earlier intraday gains.

A significant factor influencing the USD's retreat is the pullback in US Treasury yields. The yield on the 10-year US bond currently stands at 4.46%, which, while still relatively high, represents a slight decline from previous levels. This yield pullback is likely having a limiting effect on the Greenback's upside potential. The US Dollar Index (DXY), which measures the USD against six other major currencies, is trading at around 105.60 at the time of this report.

Market participants are eagerly awaiting the release of economic data, particularly the preliminary S&P Global PMIs for September in the United States. These datasets can provide valuable insights into the economic conditions and may help traders identify potential trading opportunities in the AUD/USD pair.

In its recent meeting on Wednesday, the Federal Reserve (Fed) opted to keep interest rates within the range of 5.25% to 5.50%. During the subsequent press conference, Fed Chairman Jerome Powell reaffirmed the central bank's commitment to achieving its 2% inflation target. Powell also mentioned the Fed's readiness to raise rates if necessary. This hawkish stance by the Fed has the potential to exert pressure on the AUD/USD pair.

On the flip side, a recent survey has indicated that Australia's private sector has returned to growth in September after experiencing two consecutive months of contraction. This provides some support to the AUD/USD pair. The Judo Bank Flash Australia Composite PMI displayed an improvement, rising from 48.0 in August to 50.2 in the current month.


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