AUD/USD creeps lower despite a risk-on impulse spurred by US equities

• AUD/USD reclaimed the 0.6700 figure but remains unable to register gains.
• The US trade deficit narrowed in July, as exports registered a record high.
• Australia’s GDP exceeded estimates, while money market futures foresee a 50 bps RBA rate hike in October.

AUD/USD operates below its opening price on Wednesday, spurred by a sour market sentiment during the Asian session. However, as the European and North American sessions have taken over, sentiment shifted slightly positive, so the AUD/USD is recovering some ground.

During the day, the AUD/USD tumbled towards the 0.6698 daily low but bounced off, trimming some of its losses. At the time of writing, the AUD/USD is trading at 0.6726, down 0.09%.

AUD/USD on the defensive despite positive Aussie data

The US Department of Commerce revealed that July’s US trade deficit narrowed, as exports registered a record high, which could impact and contribute to GDP growth in Q3. Later, the Cleveland Fed President Loretta Mester crossed newswires, saying that the last labor market report flashed signs of moderation. She added that markets need to focus on the path of interest rates rather than “one particular meeting.” Further, she expressed that she will decide the size of rate hikes in the September meeting, and she’s not convinced that inflation has peaked yet.

On the Australian front, the Gross Domestic Product for Q2 expanded aligned with estimations of 0.9% QoQ, while Australia grew at a 3.6% pace on an annual basis. Meanwhile, money market futures expect an additional 50 bps interest rate increase from the Reserve Bank of Australia (RBA) in October, and the yield curve forecast rates to peak at around 3.85%.

AUD/USD Price Analysis: Technical outlook

From a daily chart perspective, the AUD/USD appears to form a double-bottom. Wednesday’s daily low tested a downslope-resistance-trendline, drawn from April 2022 highs, which turned support, quickly rejecting lower prices, reclaiming the 0.6700 mark. Nevertheless, to validate the chart pattern abovementioned, the AUD/USD needs to reclaim the 0.7136 resistance. Otherwise, a drop below 0.6698 could pave the way for a re-test of the YTD low.