AUD/USD steadies below 0.6750 as bears approach yearly low, Aussie GDP, Fed’s Powell eyed

• AUD/USD remains pressured at seven-week low with eyes on yearly bottom.
• Risk-aversion joined RBA-inspired fears to weigh on prices, US ISM Services PMI favored greenback bulls.
• Stimulus hopes from major economies initially propelled prices before the buyers failed.
• Australia’s Q2 GDP will be important for fresh impulse.

AUD/USD stays bearish at an almost two-month low, after falling the most in eight days the previous day, as the traders await Australia’s second quarter (Q2) Gross Domestic Product (GDP) and a speech from Fed Chair Jerome Powell. That said, the Aussie pair holds lower ground near 0.6730 during the initial Asian session on Wednesday.

The Reserve Bank of Australia’s (RBA) fourth rate hike worth 50 basis points (bps) couldn’t impress the AUD/USD bulls as the Aussie central bank signaled to slow the pace of the rate increase. The RBA also mentioned household spending is “an important source of uncertainty,” weighing on the Aussie prices.

The risk barometer pair also dropped due to the broad risk-aversion amid fears of recession and the central bank aggression after the US data printed higher figures. US ISM Services PMI rose to 56.9 versus 55.1 market forecast and 56.7 prior. However, the S&P Global Composite PMI and Services PMI eased to 44.6 and 43.7 respectively versus 45.0 and 44.1 initial forecasts in that order. Even so, the US Dollar Index (DXY) rose after the release and refreshed a 20-year high.

On the contrary, stimulus hopes from the US, China, the UK and Europe, to battle the energy/covid crisis and defend against slowdown fears, seem to have favored the AUD/USD bulls earlier on Tuesday before the bears took control.

Amid these plays, Wall Street closed in the red while the 10-year US Treasury yields jumped the most in a month to poke the highest levels since mid-June.

Moving on, Australia’s Q2 GDP will be crucial amid the latest challenges to the growth, mainly emanating from China. The forecasts suggest 1.0% QoQ and 3.5% YoY figures versus 0.8% and 3.3% respective priors, matching which could help the AUD/USD prices to consolidate recent losses.

Following that, China's trade numbers for August and Thursday's speech from Fed Chair Jerome Powell will be important as traders seek more clues on the Fed’s next moves amid escalating recession fears.

Technical analysis

A clear downside break of the two-month-old horizontal support area surrounding 0.6770-60 directs the AUD/USD prices towards the yearly low near 0.6680. However, any further downside won’t hesitate to test the downward sloping support line from May near 0.6550.