AUD/USD keeps the red near mid-0.7200s post-ADP report
- AUD/USD witnessed some selling on Wednesday and snapped four days of the winning streak.
- A strong follow-through USD buying, the risk-off impulse weighed on the perceived riskier aussie.
- Better-than-expected US ADP report remained supportive of the bid tone surrounding the USD.
The AUD/USD pair remained depressed heading into the North American session, albeit has managed to rebound few pips from weekly lows touched earlier this Wednesday. The pair was last seen trading around mid-0.7200s and moved little following the release of the US ADP report.
Having struggled to find acceptance above the 0.7300 mark, the AUD/USD pair witnessed heavy selling on Wednesday and snapped four consecutive days of the winning streak. A combination of factors pushed the US dollar back closer to one year tops and exerted downward pressure on the major.
Investors seem convinced that the Fed would begin rolling back its massive pandemic-era stimulus as soon as November. The markets might have also started pricing in the prospects for a rate hike in 2022 amid worries that the recent surge in crude oil/energy prices will stoke inflation.
The combination of factors pushed the yield on the benchmark 10-year US government bond to the highest level since June. This, along with the risk-on impulse in the markets provided an additional boost to the safe-haven greenback and further drove flows away from the perceived riskier aussie.
The USD stood tall, though had a rather muted reaction to the upbeat ADP report, showing an addition of 568K private-sector jobs in September. This was well above 428K anticipated and the previous month's downwardly revised reading of 340K and might have lifted expectations from Friday's NFP report.
Nevertheless, the fundamental backdrop seems tilted firmly in favour of bearish traders and supports prospects for a further depreciating move for the AUD/USD pair. Hence, any attempted recovery move might still be seen as a selling opportunity and runs the risk of fizzling out quickly.
Technical levels to watch