AUD/USD set to move downward from 0.7190/50 as Fed signals faster tapering – Westpac

On Friday, AUD/USD is neutral in the mid-0.71s. Economists at Westpac believe this area is set to cap the aussie. They expect the pair to move back lower from here as now the Federal Reserve is set to accelerate taper in its next week’s meeting.

Fed’s taper to be accelerated, making room for rate hikes 

“Sticking to the theme that the 0.7150/90 region should cap the aussie. The recent sharp bounce has worked off a very oversold technical position and that should open the way for AUD/USD to drift lower into next week’s raft of central bank meetings.”

“The default of Evergrande, though not new news, adds to the list of negatives including the very rapid spread of the Omicron variant; ongoing tension on the Russia/Ukraine border; weakness in Turkey/EM currencies; the likely more aggressive taper announcement and dot plots set to signal rate hikes next year from the Fed next week and the still strong USD all suggest that the aussie should weaken from the 0.7150/90 region.”