AUD/USD surrenders intraday gains, slips below 0.7500 mark amid softer risk tone

• AUD/USD struggled to preserve its intraday gains and witnessed a turnaround on Wednesday.
• A modest pullback in the equity markets benefitted the safe-haven USD and exerted pressure.
• Sliding US bond yields capped the upside for the USD and might help further losses for the pair.

The AUD/USD pair dropped to fresh daily lows, below the key 0.7500 psychological mark during the early part of the European session, albeit lacked follow-through selling.

As investors looked past upbeat Australian consumer inflation figures, the AUD/USD pair witnessed an intraday turnaround on Wednesday and retreated nearly 50 pips from the daily swing highs. A slight deterioration in the global risk sentiment – as depicted by a pullback in the equity markets – benefitted the safe-haven US dollar and drove flows away from the perceived riskier aussie.

Meanwhile, the risk-off impulse in the markets led to a further decline in the US Treasury bond yields amid uncertainty over the likely timing of the policy tightening by the Fed. In fact, the yield on the benchmark 10-year US government bond slipped below the 1.60% threshold, which held the USD bulls from placing aggressive bets and should limit any deeper corrective slide for the AUD/USD pair.

Market participants now look forward to the US economic docket, highlighting the release of Durable Goods Orders data for some impetus later during the early North American session. This, along with the US bond yields and the broader market risk sentiment, will influence the USD price dynamics and produce some short-term trading opportunities around the AUD/USD pair.

Beyond this, Thursday's Advance US Q3 GDP report and the US Core PCE Price Index on Friday will set the tone heading into next week's RBA and FOMC monetary policy meetings. Against the backdrop of fears about a faster than expected rise in inflation, fresh clues that the central banks are turning more caution should assist investors to determine the near-term trajectory for the AUD/USD pair.

Technical levels to watch