- AUD/USD consolidates its recent recovery from multi-month lows.
- Dovish sounding remarks by RBA’s Lowe held bulls on the defensive.
- Sliding US bond yields capped the USD upside and helped limit losses.
The AUD/USD pair lacked any firm directional bias on Wednesday and remained confined in a narrow trading band, just below mid-0.6700s.
The pair struggled to capitalize on its two-day-old recovery move from multi-month lows seesawed between tepid gains/minor losses through the Asian session on Wednesday.
Traders preferred to stay on the sidelines
Comments by the RBA Governor Philip Lowe reinforced prospects for a further monetary policy easing and turned out to be one of the key factors that kept a lid on the upside.
In a speech in Sydney, Lowe said that the central bank would see a strong case for cutting rates if the unemployment rate moved higher and there was no progress in lifting inflation.
Lowe, however, downplayed the fears of a prolonged slowdown due to the outbreak of coronavirus and added that recent inflation, jobs data are gradually moving in the right direction.
This coupled with a mildly positive tone surrounding the US dollar, underpinned by upbeat US economic data published earlier this week, further collaborated towards capping gains.
The USD bulls, however, lacked any strong conviction amid a pullback in the US Treasury bond yields, which seemed to be the only factor lending some support to the major, at least for now.
Moving ahead, market participants now look forward to the US economic docket – highlighting the release of ADP report and ISM Non-Manufacturing PMI – for some short-term trading impetus.
Technical levels to watch