AUD/USD trims daily losses and hovers around 0.7080 post-Fed May minutes

• The AUD/USD recovered some ground and pared some earlier losses.
• FOMC Minutes: All FOMC members agreed to 50-bps in the June and July meetings.
• Fed participants see inflation risk skewed to the upside and emphasize that inflation has not peaked.
• Fed’s Minutes: Geopolitical issues and China’s lockdowns put central banks under heavy pressure to restore price stability.

The Australian dollar grinds lower in the day but jumped off near daily’s low in the last minutes, as the US Federal Reserve’s Open Market Committee (FOMC) revealed the May minutes, which shows that officials support 50 bps in the June and July meetings, and all participants agreed that the previously mentioned decision was appropriate. Albeit the above-mentioned, the AUD/USD trades at 0.7082 at the time of writing, down 0.43%.

FOMC minutes further confirm the recent Fed members’ rhetoric

Once the minutes were released, the market mood remained upbeat. US equities are trading in the green, as market players confirmed with the US FOMC minutes what Fed policymakers had said recently. The US Dollar Index dipped toward the low 102.000 region but regained composure and stayed positive in the session, at 102.170. US Treasury yields, led by the 10-year benchmark note, is unchanged, glued to the 2.756% area.

Digging more profound into the FOMC minutes, policymakers agreed that the Fed needs to move “expeditiously” to a neutral stance and that a “restrictive” policy was appropriate. FOMC participants emphasized that they were “highly attentive” to inflation risks and added that those risks were skewed to the upside. Those participants reiterated that prices remained elevated and that it is “early” to be confident that inflation peaked.

Furthermore, all Fed officials added that the US economy was “very strong” and inflation “very high.” Moreover, FOMC members added that the Ukraine conflict and China’s lockdowns posed high risks and reiterated that restoring price stability would be challenging when the central bank scrambles to keep a solid labor market.

• Also read: Breaking: FOMC Minutes sink the US dollar a touch despite inflation risk skewed to the upside

Earlier in the North American session, the US economic docket featured housing data, which came mixed but tilted positively, as growing concerns that the US economy might slow down or hit a recession increased. Additionally, the Durable Goods Orders for April grew steadily but missed expectations.

In the week ahead, the Australian economic docket will feature the Australian Retail Sales in its preliminary reading. On the US front, Initial Jobless Claims, the Fed’s favorite gauge of inflation, the Personal Consumption Expenditure (PCE), and the University of Michigan Consumer Sentiment could provide AUD/USD traders with a fresh impetus as May is about to end.

AUD/USD Reaction to the release of the FOMC Minutes

Key Technical Levels