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AUD/USD retraces from daily highs, slides to the 0.6870 area

  • AUD/USD hit an everyday low of around 0.6929 but tumbled as sentiment shifted sour.
  • Global equities dropped as investors brace for Feds Jerome Powell speech on Friday.
  • Chinas PBoCs rate cut lifted the AUD/USD right above the 0.6900 figure before dropping towards daily lows.

The AUD/USD slightly declines in the UNITED STATES session, amidst a risk-off tone on the market, with global equities sliding, as traders brace for Fed Chair Jerome Powells speech on Friday. Reflection of these is global equities tumbling, led by US stocks, down between 1.40% and 2.30%.

The AUD/USD is trading at 0.6875 below its opening price by 0.02%, after hitting an everyday most of 0.6929, right above the 50-day EMA. Nevertheless, the major softened and dropped from the 0.6900 figure because of broad US dollar strength.

Meantime, the US Dollar Index, a gauge of the bucks value vs. a basket of peers, advances almost 0.60%, up at 108.729, closing to the YTD high at 10.9.294.

For the time being, too little economic data keeps traders centered on the Jackson Hole event. Worth noting that last weeks Feds policymakers continued expressing that although inflation data is encouraging, the central bank is definately not declaring victory. Even probably the most dovish, like Kansas City Feds Esther George, expressed that additional rate hikes are coming, though she mentioned that how big is increases is open for discussions.

During writing, money market futures STIRs show that investors have fully priced in a 50 bps rate hike by the Federal Reserve, while probability of a 75 bps increase lie at 82.8%.

Apart from this, early in the Asian session, the Peoples Bank of China (PBoC) cut its benchmark lending rate by 5 bps from 3.70% to 3.65% to stimulate the economy. The AUD/USD jumped towards 0.6906 on Chinas decision, which benefits the Australian economy, as China is among its largest trading partners.

What things to watch

The Australian economic docket will feature the Australian S&P Global PMIs for the August readings, estimated to diminish, aside from the Services PMI. On the united states side, the calendar will release the S&P Global PMIs, a prelude for next weeks ISM PMI figures, alongside Fed speakers, led by Minnesota Feds Neil Kashkari on Tuesday, and the start of the Jackson Hole Economic Symposium by Wednesday.

AUD/USD Price Analysis: Technical outlook

From the technical perspective, the AUD/USD pierced the 50-day EMA around 0.6916 but dropped, threatening to show negative in your day, exacerbating a fall towards the five-month-old downslope trendline, previously a resistance area shifted support round the 0.6800 figure. An everyday close below last weeks low at 0.6859 will pave just how for further losses.

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