Ella 
AUD/USD rebounded a few points from the 0.6430-0.6425 area (the lowest level since November 2022 hit in Asia on Wednesday), but the follow-through was lacking. The spot price is currently trading around 0.6450, falling for the 7th day in a row, easily extending the decline of the past month.
AUD/USD was given some support as weaker U.S. bond yields kept dollar bulls on the defensive below a more than two-month top reached on Monday. In addition, the slightly oversold RSI on the daily chart prompted traders to reduce their bearish positions, resulting in a small intraday rebound. Meanwhile, the dollar’s losses remained capped as markets grew more convinced the Fed would keep interest rates elevated for a long time.
It is worth mentioning that the Fed is widely expected to pause its rate hike cycle at its September meeting. Still, markets are still pricing in a 25 basis point hike by the end of the year, a bet that was confirmed by upbeat U.S. retail sales data on Tuesday, which showed consumer spending held up in July. That could boost the dollar and U.S. bond yields, and concerns over deteriorating economic conditions in China should limit AUD/USD gains.
Even a surprise rate cut by the People’s Bank of China (PBoC) failed to lift investors after another disappointing Chinese data on Tuesday stoked fears of a slowing post-pandemic recovery in the world’s second-largest economy after a dismal first quarter. confidence, so caution must be exercised before shorting China’s proxy currency, the Aussie. Therefore, strong follow-through buying is needed to confirm that a short-term bottom has been formed in spot prices and to prepare for any meaningful recovery.
Market participants now have their eyes on the U.S. economic calendar, which includes data on building permits, housing starts and industrial production due later in North American morning trade. These data, along with US bond yields and broader risk sentiment, could influence USD price dynamics and provide some impetus to the AUD/USD pair. However, the market focus will remain on the FOMC meeting minutes, which will provide clues about the Fed’s future rate hike path and help determine the near-term direction of AUD/USD.
