AUDUSD finds bids around 0.6740 as IMF advises Australia to tighten policy further

• AUDUSD has resurfaced after printing day’s low at 0.6732 after IMF’s policy tightening advice.
• An ambiguity in the risk profile has shifted the DXY into a rangebound trajectory.
• ANZ has hiked China’s GDP projections to 5.4% for CY2023 amid easing Covid-19 protocols.

 The AUDUSD pair has retreated after recording the day’s low at 0.6732 in the Tokyo session. The asset is majorly displaying a sideways performance amid obscurity in the risk profile.

Market sentiment turned negative after Poland officials reported Russian military attacks, however, US President Joe Biden said on Wednesday, "based on the trajectory, it is unlikely that the missile is fired from Russia." Also, Polish President Andrzej Duda confirmed that what happened was a one-off incident, adding that there were no indications that there will be a repeat of today's incident.

Meanwhile, the US dollar index (DXY) has displayed a marginal sell-off after facing barricades of around 106.75. The DXY is expected to remain on the tenterhooks ahead of the US Retail Sales data. The retail demand indicator is expected to improve by 0.9% vs. the prior release of 0%.

The Aussie dollar has gained some traction in Tokyo as the International Monetary Fund (IMF) has supported the view of further policy tightening by the Reserve Bank of Australia (RBA). A slowdown in the inflationary pressures is highly required despite the cost of downside risks to the economy, including falling house prices. The IMF forecasts economic growth in Australia to slow to just 1.7% in 2023-2024, citing higher interest rates, persistent inflation, weakening export demand, and declining housing prices.

Apart from that easing of Covid-19 protocols and supporting measures to curb the vulnerable real estate situation in China has also supported the antipodean. According to a note from ANZ Banking Group Ltd., China’s Gross Domestic Product (GDP) could expand by 5.4% next year as the administration eases restrictions, reported Bloomberg.