The AUD/USD pair attracted some buying on the last day of the week and moved further away from over a one-week-low touched on Thursday. The pair maintained its bid tone through the mid-European session and was last seen hovering near the top end of its daily range, around the 0.6915 region.
A significant decline in commodity prices this week seems to have eased fears about the persistent rise in inflationary pressures and boosted investors' sentiment. This was evident from the risk-on impulse across the global equity markets, which, in turn, prompted some selling around the safe-haven US dollar and benefitted the risk-sensitive aussie.
That said, the worsening global economic outlook could keep a lid on any optimistic move in the markets. Investors remained sceptical that major central banks would be able to hike interest rates to curb soaring inflation without affecting the growth. The fears were further fueled by Thursday's disappointing release of the Eurozone PMI prints for June.
Apart from this, expectations that the Fed would retain its policy tightening path and deliver another 75 bps rate hike in July should act as a tailwind for the USD. Fed Chair Jerome Powell, in his second day of Congressional testimony on Thursday, reaffirmed market bets and stressed an unconditional commitment to taming inflation, even amid risks to growth.
The fundamental backdrop makes it prudent to wait for strong follow-through buying before confirming that the AUD/USD pair has formed a near-term bottom and positioning for any further gains. Market participants now look forward to a scheduled speech by St. Louis Fed President James Bullard, which along with second-tier US macro data, might influence the USD.
Friday's US economic docket features the release of the revised Michigan Consumer Sentiment Index and New Home Sales data. Traders will further take cues from the broader market risk sentiment to grab short-term opportunities around the AUD/USD pair.
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