AUD/USD holds steady above mid-0.6700s, remains confined in a familiar trading range – by hareshmenghani AUDUSD China RBA Fed Currencies
Chinese government officials over the weekend set a lower-than-expected target of 5% GDP growth for the current year and undermined expectations of a strong recovery in the world's second-largest economy. This leads to a modest gap-down opening for the China-proxy Australian Dollar, though a softer tone surrounding theassists the AUD/USD pair to attract some buying around the 0.6740 region.
That said, the prospects for a further policy tightening by the Federal Reserve act as a tailwind for the US bond yields and the Greenback, which, in turn, seems to cap the upside for the AUD/USD pair. The markets seem convinced that the US central bank will stick to its hawkish stance and continue raising rates for longer to tame stubbornly high inflation.
Furthermore, a slew of FOMC policymakers recently backed the case for higher rate hikes and opened the door for a 50 bps lift-off at the March policy meeting. Apart from this, looming recession risks favour the USD bulls and suggest that the path of least resistance for the AUD/USD pair is to the downside.
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