AUD/USD faces hurdles around 0.6280 as market mood dampens, yields skyrocket

• AUD/USD has sensed offers around 0.6280 as the risk-off impulse has rebounded.
• The 10-year yields have printed a high of 4.26% while the DXY has crossed 113.00 confidently.
• Hawkish commentary from Fed policymakers has infused fresh blood into yields.

The AUD/USD pair has sensed selling pressure while attempting to cross the critical hurdle of 0.6280 in the Tokyo session. As the risk-off impulse has rebounded with sheer momentum, risk-sensitive currencies are feeling the heat. The asset traded sideways in early Tokyo, however, the infused volatility in the market may drag it sharply.

The US dollar index (DXY) has rebounded firmly and has refreshed its day’s high above 113.07. The DXY is expected to deliver an upside break ahead as returns on US Treasury yields are skyrocketing. The 10-year benchmark US Treasury yields have reached 4.26%, the highest since the sub-prime crisis.

It seems that the market participants are anticipating the fourth consecutive rate 75 basis points (bps) rate hike by the Federal Reserve (Fed) despite the headwinds of moderation in the labor market and a decline in retail spending.

Hawkish commentary from Fed Governor Lisa Cook has infused fresh blood in yields. Fed policymaker cited that the price growth is unacceptably higher and policy tightening will continue. After reaching a certain level, the policy will be stable until the central bank observes a slowdown in price pressures for several months.

On the Australian front, the maintenance of a status quo by the People’s Bank of China (PBOC) and the downbeat Aussie employment data have impacted the antipodean dramatically. The PBOC kept monetary policy unchanged despite the toil and turmoil in the economy and the lower inflation rate. As per September’s payroll report, the Australian economy has added mere 0.9k jobs vs. the expectations of 25k.