AUD/USD aims to recapture 0.6700 as worries for bigger Fed rate hikes fade
- AUD/USD is looking to recapture the immediate resistance of 0.6700 as the risk-on impulse solidifies.
- The Fed would be lighter on interest rates to safeguard the interest of investors and to restore consumer confidence.
- RBA Lowe will continue its policy-tightening spell for the 11th time without focusing on SVB collapse.
The AUD/USD pair is demonstrating a sideways auction around 0.6685 in the early Tokyo session. The Aussie asset is looking to recapture the round-level resistance of 0.6700 as investors are not worried anymore for fears of bigger rate hikes from the Federal Reserve (Fed).
An anticipated decline in the United States inflation, higher Unemployment Rate, lower-than-expected increase in Average Earnings, and the Silicon Valley Bank (SVB) collapse indicate that the Fed would be lighter on interest rates to safeguard the interest of investors and to restore consumer confidence.
S&P500 futures are showing a marginal correction after a super-bullish Tuesday, portraying a minor long-liquidation amid an overall risk-on mood. However, Moody’s Investors Service cut its view on the entire banking system to negative from stable, as reported by CNBC. Credit rating firms cited it as a “rapidly deteriorating operating environment” despite regulators’ efforts to safeguard the interest of depositors and institutions that were hit with liquidity issues.
The US Dollar Index (DXY) has managed to safeguard the 103.60 support, however, the downside seems likely as the risk-appetite theme is getting more traction. Meanwhile, the alpha provided on 10-year US Treasury bonds has scaled to 3.69%.
After the expected decline in the US Consumer Price Index (CPI), investors are awaiting the release of the Retail Sales data. Analysts at Credit Suisse expect “Retail sales to fall 0.9% MoM in February, partly reversing a strong increase in January. Noisy seasonal adjustments and unseasonably warm weather likely played a role in last month’s report, so a normalization lower is likely.”
On the Australian Dollar front, Reuters reported that Australia’s economic outlook will be scrutinized by the Reserve Bank of Australia (RBA) for rate hikes, unlike other nations that are focusing on SVB collapse. Analysts at three of the top four lenders - Commonwealth Bank of Australia, National Australia Bank, and ANZ Group Holdings - continue to expect RBA Governor Philip Lowe to deliver its 11th consecutive rate hike next month.