AUD/USD eases from five-month high, holds steady below 0.7000 amid sustained USD selling – by hareshmenghani AUDUSD Fed RBA China Currencies
r, trim a part of its intraday gains and retreat below the 0.7000 psychological mark in the last hour.
A combination of factors drags the US Dollar to a fresh seven-month low on Monday, which, in turn, acts as a tailwind for the AUD/USD pair. The US consumer inflation figures released last week showed that the headline CPI fell for the first time in more than 2-1/2 years in December. The data fueled speculations that the Fed may be nearing the end of its rate-hiking cycle and lifted bets for smaller rate hikes in February.
The Australian Dollar draws additional support from rising odds for a further interest rate hike by the Reserve Bank of Australia in February, bolstered by the upbeat domestic data released last week. In fact, the Australian Bureau of Statistics reported that the headline Consumer Price Index re-accelerated to the 7.3% YoY rate - a 32-year-high - in November from the 6.9% in the previous month. Furthermore, Australian Retail Sales surpassed the most optimistic estimates and jumped 1.
Market participants, however, remain worried about the economic headwinds stemming from the COVID-19 outbreak in China. Apart from this, the protracted Russia-Ukraine war has been fueling concerns about a deeper global economic downturn, which keeps a lid on the optimism in the markets. Traders also seem reluctant to place aggressive bullish bets around the AUD/USD pair amid a holiday in the US and ahead of the Chinese economic release, including the Q3 GDP print, on Tuesday.
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