Ella 
AUD/USD extended losses as investors took a cautious stance ahead of the release of the US first quarter GDP rate on Thursday and the release of the core PCE price index on Friday. These data are expected to reflect the Fed’s potential stance on interest rate adjustments.
AUD/USD’s losses may be limited as the Australian 10-year government bond yield hit a four-week high of 4.52%. The shift reflects investors’ views that the Reserve Bank of Australia will maintain rising interest rates for a longer period of time. In addition, according to Bloomberg, China, one of Australia’s largest trading partners, has lifted its beef shipping ban on Australia’s five largest meat producers, which may strengthen the Australian dollar.
Australia’s monthly consumer price index released on Wednesday showed strong data, which may prompt the Reserve Bank of Australia to consider another rate hike. The minutes of the central bank’s May policy meeting showed that the central bank has considered the possibility of a rate hike.
The US dollar index (DXY), which measures the US dollar against six major currencies, was higher around 105.10. At press time, the 2-year and 10-year US Treasury yields were 4.98% and 4.61%, respectively. Risk aversion supported the US dollar (USD), limiting the rise of the AUD/USD currency pair.
On Wednesday, the Federal Reserve’s Beige Book report for April through mid-May showed a modest increase in economic activity nationwide, with mixed results across industries and regions. The report also showed a modest increase in employment, modest wage growth and modest price increases as consumers resisted further price increases.
