AUD/USD plunges below 0.7000 on a buoyant greenback

• The Australian dollar prepares to finish the week with losses of almost 1.60%.
• Fluctuating sentiment in the FX space boosts the USD and weighs on the AUD.
• St. Louis Fed President Bullard: Achieving a soft landing is feasible.

AUD/USD plummets from weekly highs reached on Thursday around 0.7069, down below the 0.7000 mark, after Wednesday’s afternoon Federal Reserve rate hike, which initially lifted the major to fresh weekly highs above 0.7000. However, Friday’s overall US Dollar strength brought the pair down. At 0.6930, the AUD/USD is down 1.58% and will finish the week with losses close to 1.58%.

The mixed mood in the FX complex weighs on the AUD and boosts the USD

US equities are trading barely in the green in a choppy trading session. The Australian dollar is the third weakest currency of the day in the FX complex, while the buck is recovering some ground. The US Dollar Index, a gauge of the buck’s value vs. a basket of six peers, is gaining 0.95%, currently at 104.785.

The AUD/USD remains weak due to falling commodity prices. Also, additional Covid-19 Chinese lockdowns loom. China’s is Australia biggest trading partner, so any slowdown in its economy would hurt the Australian dollar outlook dramatically.

The lack of Australian economic data left AUD/USD traders adrift to the US calendar. US Industrial Production rose by 5.8% YoY, less than April’s 6.3%, adding to signs of economic slowdown.

Elsewhere, Fed speakers begin to dominate headlines. Minneapolis Fed Neil Kashkari said that he supported 75 bps in June and could support another in July. He added that a prudent strategy might be to continue with 50 bps increases. St. Louis Fed President James Bullard said a soft landing is feasible if the post-pandemic shift is done well.

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