AUD/USD firms up toward 0.6800 as risk flows return
04.01.2023, 03:28

AUD/USD firms up toward 0.6800 as risk flows return

  • AUD/USD is jumping back beyond 0.6750 amid an upbeat mood.
  • Risk flows and negative Treasury yields restrict the US Dollar bulls.
  • The Aussie pair looks to US ISM Manufacturing PMI and Fed Minutes.

AUD/USD is firming up to recapture the 0.6800 barrier, catching a fresh bid at around the 0.6720 region amid the return of risk flows in Asia this Wednesday.

Expectations of a dovish Federal Reserve (Fed) Minutes are helping lift the market mood, in turn, underpinning the higher-yielding Australian Dollar at the expense of the safe-have US Dollar. The renewed weakness in the US Treasury yields across the curve is also hurting the sentiment around the greenback. The US Dollar Index has slipped from near 104.70 levels to 104.50 in Asia so far while the benchmark 10-year US rates are down 1.50% on the day to 3.735%.

The AUD/USD pair is also drawing support from the latest comments by China’s Finance Minister Liu Kun, who endorsed plans to appropriately expand fiscal spending, as the economic recovery is still not solid.

All eyes now turn toward the US ISM Manufacturing PMI release and the Fed December meeting Minutes for fresh US Dollar trades and the impact on risk sentiment. In December, the headline ISM Manufacturing PMI is seen lower at 48.5 while the New Orders Index is expected to improve to 48.1 alongside the Employment Index at 49.1.

AUD/USD: Technical levels to consider

 

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