August 30, 2022 03:01 AM ET
AUD/USD is struggling to capitalize on the previous day's strong rebound from the 0.6840 region, a six-week low, and is attracting further selling on Tuesday. The intraday decline, however, found support near the 0.6875 area and helped spot prices reach a new daily high around the 0.6915-0.6920 area in the early European session.
The Australian Bureau of Statistics reported that construction approvals plunged 17.2 percent in July, following a 0.6 percent decline in June. This data indicates a continued deterioration in housing market conditions amid rising interest rates, which is putting some downward pressure on the Australian dollar.
That said, weakness in the U.S. dollar helped limit the decline in the AUDUSD.
A further decline in US Treasury yields, coupled with a generally positive risk tone, appears to be undermining the safe-haven greenback while providing some support to the risk-averse. AUD/USD, however, may struggle to capitalize on the intraday rebound amid hawkish Fed expectations, which is likely to continue to act as a headwind for the greenback in the near term.
In fact, markets are pricing in a higher probability of a 75 basis-point Fed rate hike at the September meeting. The bets were reaffirmed by Fed Chairman Jerome Powell, who indicated that interest rates would be kept higher for longer in order to reduce inflation. This favors the dollar's bullishness and should prevent traders from positioning themselves for a significant rise in the AUD/USD pair.
Market participants are eagerly awaiting the U.S. economic calendar, which will include job opening data (JOLTS) and the Conference Board's consumer confidence index later in the North American session. This data, along with U.S. bond yields and general risk sentiment, could influence the dollar's price momentum and offer short-term trading opportunities for the AUD/USD pair.