AUD/USD Holds Steady as USD Weakens
The AUD/USD pair attracted some dip-buyers on Thursday (11/21) and held on to modest intraday gains, around the 0.6520 region through the first half of the European session. The uptick was sponsored by a softer tone surrounding the US Dollar (USD), though lacked bullish conviction and warrants some caution before positioning for an extension of the recent bounce from three-month lows touched last week.
The USD bulls preferred to move to the sidelines and seek more clarity on US President-elect Donald Trump’s proposed policies before putting in place any new ones. Moreover, the initial reaction to Russian President Vladimir Putin’s agreement to lower the nuclear strike threshold on Tuesday turned out to be short-lived as comments from Russian and US officials eased fears of a nuclear war. This, in turn, remained supportive of the upbeat market mood, which further seemed to undermine the safe-haven dollar and benefitted the risk-sensitive Aussie.
Furthermore, the Reserve Bank of Australia's (RBA) hawkish stance offers additional support to the Australian Dollar (AUD). In fact, the minutes of the November RBA meeting released earlier this week indicated that the board members remained vigilant to upside inflation risks and stressed the importance of maintaining a restrictive monetary policy. Meanwhile, expectations for a less dovish Federal Reserve (Fed) should continue to act as a tailwind for the USD and hold back traders from placing aggressive bullish bets around the AUD/USD pair.
Source: FXStreet
