Slight Pullback Hales the Aussie Pair
The AUD/USD currency pair dipped a bit lower while it headed to the opening of the European session to begin the week and it was observed hovering close to the lower end line of its trading range on the day in the vicinity of 0.7400 benchmarks.
The currency pair saw a relative drawback off a two-week high in the region of 0.7425 it was earlier in the early hours of Monday, and right now, it looks like it has broken through four consecutive days of a winning trend line. The initial caution in the market mood was taken to be a major factor that served as a headwind in the advantage of the Australian dollar which is perceived to be the riskier of the currencies. This, alongside the surge in the purchase of the US dollar, has successfully imposed a measure of pressure on the AUD/USD currency pair.
AUD/USD price chart. Source TradingView
Despite the long-lasting hopes to have a ceasefire deal brokered between Russia and Ukraine, and eventually end the war, investors continue to be on the edge as Russian troops intensify their efforts at bombarding Kyiv, the Ukrainian capital. Several airstrikes by the Russian air force have been reported in the last couple of days. This has consequently put a lid on the latest optimistic movements in the markets and they have benefitted the US dollar as a safe-haven asset. The safe-haven status of the US dollar is further underpinned by the Federal Reserve’s hawkish stance. As a matter of fact, the Federal Reserve gave hints that it might increase interest rates at every one of its six other meetings remaining in 2022.
Reasons for Various FOMC Votes
In addition to that, the statements from influential members of the Federal Open Market Committee, as well as increased American Treasury bond yield, have contributed to the inspiration of US dollar bulls. The President of St. Louis Federal Reserve, James Bullard, offered an explanation on why he voted in support of a 50 basis points rate increase and he mentioned on Friday that the central bank’s face was at stake if it does not act swiftly.
Furthermore, Federal Reserve Governor, Christopher Waller, stated that the ongoing war in Eastern Europe was why he refrained from pushing hard for a 50 basis points interest rate increase, nevertheless, it remains on the table for subsequent meetings. This aided the bond yield on the ten-year American government bond to remain in a steady position right under the highest level it had been at since June 2019.