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70 US cents on the horizon following a more positive FOMC outlook
AUD - Australian Dollar
The Australian Dollar opened at 0.7048 on Wednesday morning as another quiet day on the domestic front continued. Markets saw a twenty-pip range during the Asian session with a bank holiday in China subduing markets. AIG manufacturing data was positive in its release as the manufacturing sector continued to expand for the month of April.
Main movements on the Aussie dollar were seen lower overnight following the Federal Reserve decision to keep interest rates on hold. The AUD/USD was unable to sustain levels around the 70.50 US cent mark as Federal Reserve chairman Jerome Powell was optimistic on current growth levels for the world largest economy. Eventual lows were seen at 0.7010 but refuses to dip below 70 us cents in what is a strong support level.
From a technical perspective, the AUD/USD pair is currently trading at 0.7015. We continue to expect support to hold on moves approaching 0.7000 while now any upward push will likely meet resistance at 0.7100.
Key Movers
The Greenback was the key mover overnight, bolstered by a strong ADP employment report as 275,000 jobs were added to the private sector. The DXY rebounded overnight from Wednesday lows of 97.15 to see an overnight high of 97.73. The main price action occurred following the release of the latest FOMC rate statement leaving rates on hold at the target range of 2.25-2.5%. Fed Reserve chairman Jerome Powell was positive in his sentiment noting strong labour conditions and inflation near their target of 2%.
The Great British Pound was one of the few currencies that moved relatively higher over the past 24 hours following a 2.5% decline in April against the greenback. Gains were seen to highs of 1.3100 initially against the dollar pre-FOMC decision and was stronger against the Euro as Brexit talks have taken a breather in the lead up to this evenings Bank of England interest rate decision.
Markets have been pricing a more bullish stance from the central bank despite the likelihood that tonight they will hold interest rates at 0.75%. Markets currently pricing a 40% chance of one interest rate hike by year end.
AUD/USD: 0.6980 - 0.7060 ▼
AUD/EUR: 0.6200 - 0.6300 ▼
AUD/NZD: 1.0550 - 1.0650 ▲
GBP/AUD: 1.8400 - 1.8900 ▲
AUD/CAD: 0.9380 - 0.9460 ▼