AUD/USD extends losses below 0.7300, ignores upbeat Aussie data amid firmer yields

• AUD/USD refreshes weekly low despite firmer Aussie Q3 Wage Price Index.
• US Treasury yields poke three-week top as inflation concerns remain elevated.
• Xi-Biden talks fail to impress, US Treasury Sec. Yellen extends debt ceiling date.
• Fedspeak, China headlines will be important after RBA updates pour cold water on the face of Aussie bulls.

AUD/USD takes offers to refresh intraday low around 0.7285 during early Wednesday. In doing so, the Aussie pair extends the heaviest daily fall in a week, posted the previous day, to refresh the week’s bottom.

That said, the quote ignores the recently released Australia Wage Price Index data for the third quarter (Q3). The WPI figures match 2.2% YoY expectations versus 1.7% prior while rising past 0.5% QoQ market consensus to 0.6%, compared to 0.4% previous readouts.

Market’s rush for risk-safety amid speculations over the US Federal Reserve’s (Fed) monetary policy tightening and an absence of encouraging details from a virtual meeting between US President Joe Biden and his Chinese counterpart Xi Jinping favors AUD/USD bears of late. On the same line was the rejection of rate hike concerns by the Reserve Bank of Australia (RBA) Minutes and Governor Philip Lowe.

It’s worth noting that the safe-haven demand underpins US bond selling and favors the US dollar. Also supporting the greenback bulls are the hopes of more stimulus and relief that the debt ceiling expiry is being extended to December 15.

With that in mind, the US Treasury yields stay firmer around 1.63% after rising 2.3 basis points (bps) to refresh a three-week high whereas the US Dollar Index (DXY) also pokes the 16-month top. Further, equities were also positive whereas the S&P 500 Futures remain firm by the press time.

Given the lack of major data/events, a slew of comments from various Fed policymakers will be in focus to determine the rate hike concerns after the latest Fedspeak has been mixed as ever. It should be noted that San Francisco Federal Reserve Bank President Mary Daly recently said, “Today's inflation in mid-2022 is a different conversation.”

Technical analysis

A convergence of the 100-DMA and the 50-DMA restricts the short-term upside of the AUD/USD prices around 0.7360-65. However, 61.8% Fibonacci retracement (Fibo.) of August-October upside and a three-month-old support line, respectively around 0.7275 and 0.7245, will challenge the immediate downside of the Aussie pair.