- Risk appetite helped AUD perceived as riskier to gain traction on Monday.
- Rising US bond yields revived USD demand and limited any significant gains.
AUD/USD maintained its offered tone during the early US session. And additionally was trading around the 0.7485-90 zone, up 0.35% on the day.
The pair attracted fresh buying
Despite the prevailing risk appetite environment in the markets. Which favors the perceived riskier Aussie, the pair attracted fresh buying on the first day of a new trading week. However, a good recovery in the US dollar did not help the AUD/USD pair capitalize on its move. Or to find acceptance above the key psychological level of 0.7500.
The dollar received some support from rising U.S Treasury yields and posted a solid rebound from near one-month lows touched earlier on Monday. The yield on the 10-year U.S. government bond remained above 1.65%. Indicating that the Fed may tighten policy sooner than expected.
Chairman Jerome Powell reaffirmed Friday that the U.S. central bank is on track to begin winding down its massive stimulus from the pandemic era. A possible rate hike in 2022 factored into markets amid concerns that the recent rally in commodity prices will spark inflation.
In the absence of relevant economic releases in the US market, this was a key factor holding up any significant gains for the AUD/USD pair. Investors also abstained from aggressive bets, choosing to stay on the sidelines ahead of this week’s key macroeconomic data from Australia and the US.
Australia’s quarterly consumer inflation figures will release on Wednesday.
Australia’s quarterly consumer inflation figures will release on Wednesday. This, along with the advanced US Q3 GDP report on Thursday, will help determine the next leg of a directional move for the AUD/USD pair. In the meantime, USD price dynamics and general market sentiment will be taken into account for some trading momentum.