The Aussie is ranging around 0.7110, after losing nearly 150 pips the previous day, as traders expect the key catalysts while taking a breather following the heavily volatile sessions. That said, the Aussie pair’s latest inaction could also be linked to the cautious mode ahead of full markets as Japan finally returns to trading, following China’s trading restart on Thursday, after a long break.
The early Thursday’s optimism in the market couldn’t withstand the Bank of England’s (BOE) forecasts suggesting doubt-digit inflation and economic recession that rocked the boat in the US as well.
Following this, Wall Street indices slumped more than 3.0% each while the US 10-year Treasury yields rallied 3.40% on a daily closing while rising to the fresh high in late 2018 beyond 3.00%. As a result, the US Dollar Index (DXY) also regained its strength and poked April’s multi-month high around 104.00.
Looking forward, the Reserve Bank of Australia’s (RBA) justification of the larger-than-expected rate hike, via the Monetary Policy Statement (MPS), will be crucial for the AUD/USD traders, especially after the latest inflation and growth fears, which in turn could favor sellers if perceived negative. Also important will be the monthly employment report from the US as the Fed’s 50 bps rate hike hoped no major challenges from the jobs and inflation front.
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