AUD / USD Heads To October Daily Lows


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  • AUD / USD is on October lows on a strong USD theme.
  • The RBA and the Fed are at the center of this pair with a hawkish bias towards the latter.

AUD / USD is stable on this day in calm Thanksgiving market conditions, although that hasn’t stopped the pair from sliding deeper to the daily lows of 0.7191 printed in October. Price moved from a high of 0.7209 to a low of 0.7179 on the day. The majority of the offering occurs at the London open with dips made at the New York open where the pair has drifted sideways since.

The greenback fell slightly on that day. It was drifting from its highest level since July 2020 which was printed against the euro, despite concerns about Covid in Europe and expectations that the US Federal Reserve will raise rates sooner than other major central banks. The DXY Index, a measure of the US dollar against a basket of rival major currency pairs, fell to 96.652 after a day high of 96.806 and 96.887, the cycle high after FOMC minutes.

The November 2-3 Fed meeting minutes gave the dollar a boost as it was confirmed that the Fed had become more concerned about rising inflation. Various policymakers have said they would be willing to speed up their reduction in their bond buying program, including the Fed’s Mary Daly, who is now also arguing for a faster pace.

Meanwhile, with central banks in the center of attention, the Reserve Bank of Australia’s tightening could be extended, ANZ Bank analysts have argued.

RBA Governor Phillip Lowe’s recent statements about the level of the neutral rate and the flatness of the Phillips curve could combine to imply a faster and more aggressive start to the tightening cycle when it finally arrives. If the RBA continues slowly, regardless of what it “should” do, we can find that the tightening cycle is very lengthened. ”

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