Solid Gold Berjangka – The AUD/USD pair weakened during Thursday’s trading session after reaching a monthly high, halting a four-day winning streak. Despite this correction, the pair managed to hold above the psychological 0.7000 level during the first half of Thursday’s European session (October 22).
Pressure on the Australian dollar emerged amid growing concerns over an escalation of conflict in the Middle East. A "risk-off" sentiment prompted investors to reduce their exposure to riskier assets, including the Aussie. However, this pressure was tempered by a weaker US dollar and hawkish remarks from Reserve Bank of Australia (RBA) officials.
RBA Assistant Governor Christopher Kent recently indicated that the neutral interest rate—both in Australia and globally—may be rising. Meanwhile, RBA Deputy Governor Andrew Hauser suggested that trimmed-mean inflation for the third quarter could come in higher than anticipated, keeping expectations for a potential rate hike alive ahead of the November 3 meeting.
Additional support for the Aussie came from China’s third-quarter economic growth, which exceeded expectations. On the other hand, the US dollar remained under pressure after Federal Reserve officials signaled a lack of urgency to raise interest rates at the upcoming October 27–28 meeting.
Falling US government bond yields—retreating from multi-year highs—also capped the US dollar’s strength and helped limit the decline in the AUD/USD pair. Nevertheless, market participants appear cautious about taking aggressive positions ahead of next week’s FOMC decision, which will be a key determinant for the future direction of the US dollar and the subsequent movement of the AUD/USD pair. (srh)