AUD/USD Remains Vulnerable to Correction
The AUD/USD weakened on Tuesday, moving around 0.7115–0.7132 after the greenback strengthened amid expectations of a more hawkish Fed and Middle East uncertainty. RBA data showed the AUD was at 0.7132 as of May 19, while Trading Economics noted that the AUD/USD had fallen to around 0.7118.
The main pressure came from the strengthening greenback as investors reconsidered the risks of energy inflation and rising US bond yields. Reuters noted that the Aussie also weakened by around 0.75% as the market remained concerned that the Fed would maintain high interest rates for longer.
In addition to US factors, the Aussie is also sensitive to the outlook for China, as Australia is heavily dependent on commodity demand from China. If Chinese data weakens or commodity prices correct, the AUD/USD usually comes under pressure.
Causes:
The greenback strengthened.
US bond yields remain high.
Expectations for a hawkish Fed increased.
Sentiment on China and commodities were less supportive.
Geopolitical risks in the Middle East continue to make the market cautious. (CP)
Source: Newsmaker.id
