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AUD/USD holds near 0.6975 as US yields and Fed bets firm USD
FXStreet notes the 10-year US Treasury yield is near 4.7% and CME FedWatch shows a 33.7% chance of a hike next week.
The Australian dollar is trading marginally higher against the US dollar, around 0.6976 in European hours, as surging US Treasury yields revive hawkish Federal Reserve rate expectations and weigh on risk appetite, according to FXStreet.
FXStreet said 10-year US Treasury yields are near 4.70%, the highest level seen in more than 18 months, while the US dollar index (DXY) is around 101.50 near a three-week high. It also cited CME FedWatch odds showing a 33.7% chance of a Fed rate hike next week, up from 11.8% last week, after soft US CPI data for June.
The outlet linked the renewed hawkish pricing to higher oil prices tied to risks of prolonged closures affecting the Strait of Hormuz and the Bab el-Mandeb Strait, which it said are responsible for 27% of global energy supply and are boosting inflation projections.
On the technical front, FXStreet said AUD/USD is hovering near the 20-period exponential moving average at about 0.6975, with the relative strength index around 49. It added that a break above the July 21 high at 0.7027 could open the door to 0.7100, while support is likely to be tested near the June 30 low at 0.6865 if the pair falls below the July 14 low at 0.6913.
The piece also pointed to stronger Australia data, with June employment adding 76.3K jobs versus 44K in May, and Australia composite PMI at 52.6 versus 50.4 in June, alongside a flash S&P Global PMI for July.
Latest closeDollar index 101.44 ▲0.3%