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Title: AUD/USD keeps the red below 0.6300 mark, seems vulnerable amid resurgent USD demand

Oct 24, 2022 7:04 AM ET


The AUD/USD pair is under renewed selling pressure, retreating more than 100 pips from levels just above the 0.6400 mark, or a two-week high touched earlier on Monday.

The bearish trajectory dragged spot prices below the 0.6300 round figure during the first half of the European session and was supported by a strong rebound in U.S. dollar demand.

Despite reports that some Fed officials are signaling increased discomfort with oversized rate hikes, markets appear convinced that the US central bank will maintain its path of faster monetary policy tightening.

This, in turn, continues to support elevated US Treasury yields and helps the dollar regain strong positive traction on the first day of a new week.

The Australian dollar, on the other hand, is pressured by concerns about economic headwinds stemming from China's zero-COVID policy, which overshadowed upbeat third quarter Chinese GDP, which showed the world's second largest economy expanded 3.9% year-on-year. In addition, Chinese industrial production rose 6.3% y-o-y in September, versus an estimated 4.5%.

Meanwhile, the Reserve Bank of Australia (RBA) decided earlier this month to slow the pace of its policy tightening. This suggests that the path of least resistance for AUD/USD is to the downside, and any recovery attempt could be seen as a selling opportunity.

Market participants are now awaiting the release of US PMI data, which will be released early in the North American session. The data, along with US bond yields and risk sentiment in general, could influence dollar price dynamics and provide some momentum to the AUD/USD pair.

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