AUD/USD slides to 0.6300 as risk sentiment dwindles amid firmer yields

• AUD/USD takes offers to renew intraday low, print the first daily loss in three.
• Market sentiment roils as economic calendar gets active.
• Four-month high covid numbers from China, hawkish Fed bets favor bears.
• Risk catalysts are important ahead of Thursday’s Aussie jobs report.

AUD/USD takes offers to renew intraday low around 0.6300 as markets fade the previous risk-on mood during early Wednesday in Europe. Also exerting downside pressure on the risk-barometer pair could be the firmer US Treasury yields and anxiety ahead of Thursday’s Australian employment data for September.

The US 10-year Treasury yields added six basis points (bps) near 4.06% mark at the latest. In doing so, the US bond coupons rush towards the 14-year high marked earlier in the week amid hawkish Fedspeak and mixed US data.

Earlier in the day, Minneapolis Federal Reserve Bank President Neel Kashkari said, “Until I see some compelling evidence that core inflation has at least peaked, not ready to declare a pause in rate hikes.” With this, the CME’s FedWatch Tool signals that markets are pricing in a nearly 95% chance of the Fed’s 75 rate hike in November. That said, US Industrial Production for September improved but the NAHB Housing Market Index for October dropped, respectively around 0.4% MoM and 38 versus the market expectations of 0.1% and 43 in that order.

Other than the Fed-linked catalysts, increasing covid woes in China and the market’s rush towards risk-safety amid higher inflation data from the major economies, recently by the UK, also propel the US Treasury yields and weigh on the AUD/USD prices.

Additionally, Russia’s strong fight in Ukraine joins the political pessimism in the UK to exert additional downside pressure on the market’s previously positive mood and favor the Aussie pair sellers.

It should be noted, however, that the firmer equities and cautious mood ahead of Thursday’s Australia jobs report for September put a floor under the AUD/USD prices. That said, the headline Aussie Employment Change is expected to ease to 25K versus 33.5K prior while the Unemployment Rate may remain unchanged at 3.5%. Should the scheduled Aussie job numbers match downbeat forecasts, the recently mixed comments from the Reserve Bank of Australia (RBA) could push back the hawks and please sellers.

Technical analysis

Failure to provide a daily closing beyond the 10-DMA hurdle around 0.6300 keeps the AUD/USD bears hopeful inside a six-week-old bearish channel, currently between 0.6345 and 0.6090.