AUD/USD struggles to capitalize on modest intraday gains, fails ahead of 0.6700 mark – by hareshmenghani AUDUSD RiskAppetite Fed RBA Currencies
mark. The pair, however, sticks to modest intraday gains through the first half of the European session and is currently trading around the 0.6670-0.6675 area, still up over 0.35% for the day.
Receding fears of a full-blown banking crisis remain supportive of a generally positive risk tone, which, in turn, continues to weigh on the safe-haven US Dollar and benefits the risk-sensitive Australian Dollar. The takeover of Silicon Valley Bank by First Citizens Bank & Trust Company calmed market nerves about the contagion risk.
This, along with the fact that the Federal Reserve toned down its aggressive approach to reining in inflation, keeps the USD bulls on the defensive and acts as a tailwind for the AUD/USD pair. It is worth recalling that the US central bank sounded cautious about the outlook and signalled last week that a pause to interest rate hikes was on the horizon. The Aussie further draws support from mostly in-line domestic data, which showed that Retail Sales grew 0.
The aforementioned fundamental backdrop supports prospects for some meaningful appreciating move for the AUD/USD pair. That said, expectations that the Reserve Bank of Australia will refrain from raising interestat its April policy meeting might hold back bulls from placing aggressive bets or positioning for further gains.
In the meantime, Tuesday's US economic docket - featuring the Conference Board's Consumer Confidence Index and the Richmond Manufacturing Index - might provide some impetus to the AUD/USD pair. This, along with the US bond yields and the broader risk sentiment, might influence the USD and allow traders to grab short-term trading opportunities.
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