AUD/USD Breaks 0.7000 Amid Bullish Sentiment

By Usman Ahmed January 16, 2023, 10:59 am • Posted in Forex

The AUD/USD pair broke 0.7000 for the first time in five months during the Asian session. As people became more willing to take risks, the Aussie asset went up to 0.7015.

A five-day winning streak for S&P500 futures shows that the market is feeling good. Taking risks has caused the DXY to become volatile. As investors sell safe-haven assets in anticipation of a smaller Fed rate hike, the USD Index has fallen to a seven-month low of 101.44.

Martin Luther King Day is on Monday, so US markets are closed.

The US Dollar Index (DXY) dropped sharply because it became more likely that the Fed would raise rates by 25 basis points in February. The CME FedWatch Tool says that a 25-bps rate hike is 94% likely to push interest rates up to 4.50–4.75%. After inflation rates went down, Fed policymakers felt more confident that they could keep prices stable, which made it more likely that interest rates would go up less.

The Aussie dollar will be affected by China’s GDP numbers on Tuesday. According to predictions, GDP may drop from 3.9% to 1.8% in the fourth quarter. Compared to the 3.9% growth reported earlier, quarterly economic data will likely go down by 0.8%.