AUD/USD declines towards 0.6300 despite robust Trade Balance data

• AUD/USD is declining towards 0.6300 despite the better-than-projected Australian Trade Balance data.
• The risk-sensitive currencies are facing a sell-off on Fed’s interest rate hike.
• Going forward, investors will focus on US employment data.

The AUD/USD pair has slipped below the immediate support of 0.6330 despite the Australian Bureau of Statistics having reported a steep rise in Trade Balance data. Trade activities have been accounted at 12,444M than the projections of 8,850M and the prior release of 8,324M. Exports have increased sharply by 7% while imports have grown by 0.4%.

The asset displayed a juggernaut fall in the late New York session as a fourth consecutive rate hike of 75 basis points (bps) by the Federal Reserve (Fed) along with a hawkish commentary on guidance spurted the risk aversion theme. S&P500 witnessed a bloodbath as hawkish guidance from Fed chair Jerome Powell has raised concerns over US corporate earnings ahead.

A continuation of policy tightening will force the corporate to postpone its expansion plans due to higher interest obligations. Also, the real estate market will be the biggest victim due to expensive mortgages.

The US dollar index (DXY) has moved to 112.20 amid the rising safe-haven’s appeal. While 10-year US Treasury yields have jumped to 4.12%.

A rate hike by the Fed has also widened the Fed-Reserve Bank of Australia (RBA) policy divergence. This week, the RBA Governor Philip Lowe continued its 25 bps rate hike structure, keeping in mind, economic prospects should remain firmer along with the agenda of bringing price stability.

Going forward, investors will focus on the release of the US employment data. The US Nonfarm Payrolls (NFP) is seen lower at 200k vs. the prior release of 263k. While the Unemployment Rate will increase to 3.6%. It looks like higher interest rates and lower consumer spending has paused the recruitment process by various firms.