AUD/USD marches firmly above 0.6700, pre-Powell speech

• US Dollar remains on the back foot against the Australian Dollar.
• Mixed US economic data was ignored by investors focused on Fed’s Powell.
• Inflation in Australia eases lifting pressure on the Reserve Bank of Australia.

The Australian Dollar (AUD) advances steadily in the New York session amidst a mixed sentiment triggered by investors bracing for Jerome Powell’s speech for reasons that could give a leg-up to risk-perceived assets or rock the boat and bolster the US Dollar (USD). After hitting a daily low of 0.6670, the AUD/USD is trading at 0.6709, above its opening price by 0.24%.

Investors remained sidelined due to Powell’s speech

Wall Street’s sentiment remains fragile. Investors get ready for Powell after a slew of Federal Reserve officials paved the way for moderating interest-rate increases and emphasized that the Fed would not pause soon. Speculations for a Fed pivot sent US equities rallying, and the US Dollar weakened, as shown by the US Dollar Index (DXY) dropping from around 110.000 to 105.340.

In the FX space, the AUD/USD recovered after hitting a November low of 0.6272 and climbed toward 0.6800. Nevertheless, failure to decisively conquer the latter exacerbated a pullback to 0.6600 before consolidating around 0.6600-0.6700.

In the meantime, the US economic docket featured the ADP Employment Change report for November, showing that the impact of Fed tightening is finally taking its toll on the labor market. The reading came at 127K new jobs added to the economy, well below estimates. Later, the US Department of Commerce revealed that the US economy in the third quarter grew at a 2.9% pace, vs. 2.6% on its advance release, and smashed the second quarter’s 0.6% contraction.

Softer-than-expected Australia CPI eased pressure on the RBA

Aside from this, in the Asian session, the Australian CPI for October rose by 6.9% YoY, below the 7.6% forecasts. Additional data like Building Permits for October disappointed investors and plunged -6% MoM below estimates.

Therefore, the AUD/USD remains neutral-to-upward biased, but Jerome Powell’s speech could exert downward pressure if his remarks are hawkish. Otherwise, expect further AUD upside if he acknowledges the pace of rate hikes.

AUD/USD Key Technical Levels