AUD/USD recovers from Tuesday’s losses, steady at 0.7147 as Powell testifies on Congress

• The Australian dollar retreated from a daily high at 0.7172 down to 0.7146 as Fed Chair Powell testifies on Congress.
• Positive market sentiment weighed on the greenback, as the US Dollar Index falls 0.09%.
• US ADP Employment Change rose to 534K more than the 525K foreseen by analysts, Nonfarm Payrolls eyed.

The AUD/USD cuts Tuesday’s losses during the New York session, up some 0.27%, trading at 0.7147 at the time of writing. Positive market sentiment in the financial markets favors risk-sensitive currencies like the AUD, the NZD, and the CAD. Also, US equity indices are rising, after on Tuesday, the Omicron COVID-19 variant woes and hawkish commentary of Fed’s Chairman Jerome Powell dampened the market mood.

In the overnight session, the AUD/USD pair recovered most of Tuesday’s losses, peaking at around 0.7172. However, as the European session got underway, it retested the 50-hour simple moving average around 0.7140 but bounced off that level, printing another leg-up, ahead of the testimony of Fed’s Chair Jerome Powell and Treasury Secretary Janet Yellen, before the Congress.

Summarizing some Fed’s Powell remarks, he said that wages have moved up “significantly.” He reiterated that inflation is connected to the pandemic, and elevated prices have been stubbornly persistent. Further noted that “we need to move on from the word transitory” and reinforced that the economy is very strong.

In the Asian session, the Australian economic docket featured the Real Gross Domestic Product for the Q3, quarterly and yearly figures. The quarterly reading shrank 1.9% less than the 2.7% contraction expected, whereas the annual number rose by 3.9%, higher than the 3.0% estimated. According to sources cited by the Guardian, “given the backdrop of lockdowns in NSW, Victoria and the ACT, this is an impressively strong performance.”

On the US economic front, the US ADP Employment Change for November showed that private payrolls rose by 534K, more than the 525K foreseen by analysts. Meanwhile, the US ISM Manufacturing PMI rose by increased to 61.1, a tenth higher than the 61.0 estimated. According to Timothy Fiore, Chair of the ISM survey committee, “the US manufacturing sector remains in a demand-driven, supply chain-constrained environment, with some indications of slight labor and supplier delivery improvement.”

That said, and the ongoing testify on Congress of Fed’s Chair Powell and US Treasury Secretary Yellen, amid market sentiment, would be the catalysts for AUD/USD traders. Any hawkish comments made by Powell would favor USD bulls, though it seems at press time that Tuesday’s appearance at the Senate, priced in any statements that he would make today.