AUD/USD dribbles below 0.6900 after unimpressive Fed, focus on Australia, China data

• AUD/USD remains sidelined near three-month high after refreshing the top.
• Fed failed to impress US Dollar bulls by marching wide forecasts on rates and economic projections.
• Australian jobs report, Consumer Inflation Expectations and China Industrial Production could entertain Aussie pair traders.
• Fears of RBA’s slower rate hikes, Covid-led easing in China data challenge bulls.

AUD/USD portrays the typical pre-data anxiety as it seesaws around a multi-day high, refreshed before a few hours, during the early Thursday in the Asia-Pacific region. In doing so, the Aussie pair struggles to defend the post-Fed gains ahead of the employment data from Australia and China’s Retail Sales, as well as Industrial Production. That said, the Aussie pair takes rounds to 0.6860-50, after refreshing the multi-day high with 0.6881.

Federal Reserve (Fed) delivered the 50 bps rate hike, as expected, and also upwardly revised the dot-plot to suggest 5.1% as the terminal rate versus 4.6% shown in September’s Statement of Economic Projections (SEP). Further details of the event suggested that the inflation forecasts were upwardly revised and the growth estimations were cut down for 2023 and 2024.

Additionally, Fed Chairman Jerome Powell tried to maintain his hawkish image while noting that the ultimate level of rates is more important than how fast they go. The policymaker also added that the Federal Open Market Committee (FOMC) needs to hold rates at their peak until policymakers are "really confident" inflation comes down in a sustained way.

However, most of these actions were already anticipated and there was nothing out of the box that could have inspired the US Dollar to pare the latest losses. As a result, the US Dollar Index (DXY) stayed depressed near the six-month low despite a temporal bounce.

The US equities closed on the negative side but the US Treasury bond yields were down too, which in turn favored the AUD/USD buyers amid optimism surrounding its key customer China.

Moving on, Australia’s employment report for November, Consumer Inflation Expectations for December and China’s data dump for November will be crucial for the AUD/USD pair traders for immediate directions. The initial forecasts suggest easing in Aussie Employment Change and inflation data, as well as a static Unemployment Rate. On the other hand, downbeat Retail Sales and Industrial Production is expected from China.

To sum up, the US Dollar’s failure to cheer the mildly hawkish Fed announcements may not hold the AUD/USD to remain firmer amid downbeat forecasts for the scheduled data from Australia and China.

Technical analysis

A successful break of the downward-sloping resistance line from June, near 0.6880 by the press time, appears necessary for the AUD/USD buyers to keep the reins.