AUD/USD climbs to a fresh six-week high on Friday amid sustained USD selling bias. Expectations for gradual Fed hike rates, sliding US bond yields weighs on the USD. The risk-on impulse further underpins the safe-haven buck and benefits the aussie. The AUD/USD pair attracts fresh buying on the last day of the week and is building on its steady intraday ascent through the early European session. The momentum lifts spot prices to a fresh six-week high, around the 0.7030 region in the last hour.
The pair is gaining support from a weaker USD on the back of a less hawkish FOMC decision on Wednesday, along with the disappointing US Q2 GDP print, which fueled speculation that the Fed would not raise interest rates as aggressively as previously estimated. Apart from this, a further decline in the US Treasury bond yields is another factor which continues to weigh on the US dollar.
A generally positive tone around the equity markets is exerting additional downward pressure on the safe-haven greenback and benefitting the risk-sensitive aussie. Investors have turned optimistic amid expectations that a global economic downturn would force major central banks to ease off their aggressive policy tightening cycle.
Friday's positive move, meanwhile, validates this week's breakout through a descending trend-line resistance extending from the YTD high touched in April. Furthermore, acceptance above the 0.7000 psychological mark could now be seen as a fresh trigger for bullish traders and has set the stage for a further near-term appreciating move for the AUD/USD pair.
Market participants now look forward to the release of the US Personal Consumption Expenditures (PCE report) - the Fed preferred inflation gauge - later during the early North American session. This, along with the US bond yields and the broader risk sentiment, would influence the USD demand and produce short-term trading opportunities around the AUD/USD pair.
