AUD/USD Sticks To Modest Intraday Gains Above 0.6600 Mark, US GDP Awaited

The AUD/USD pair again shows resilience below the 0.6600 mark and attracts some buying on Thursday, snapping a two-day losing streak to its lowest level since mid-March touched the previous day. The pair maintains its bid tone through the early part of the European session, albeit lacks bullish conviction.

The uncertainty over the Federal Reserve’s rate-hike path fails to assist the US Dollar (USD) to capitalize on the overnight bounce from a nearly two-week low, which, in turn, is seen lending some support to the AUD/USD pair. Fresh concerns about banking contagion risks in the United States (US), the debt ceiling standoff, and looming recession fears have fueled speculation about an imminent rate cut by the Fed later this year. Apart from this, a slight recovery in the global risk sentiment – as depicted by a stable performance around the equity markets – further undermines the safe-haven buck and benefits the risk-sensitive Aussie.

The markets, meanwhile, seem convinced that the US central bank will hike interest rates by another 25 bps at the next FOMC policy meeting in May. This supports a further rise in the US Treasury bond yields, which acts as a tailwind for the Greenback and keeps a lid on any further gains for the AUD/USD pair. Traders also seem reluctant and preferred to wait on the sidelines ahead of the release of the Advance US Q1 GDP report, due later during the early North American session. The growth in the world’s largest economy is anticipated to slow to a 2% annualized pace during the January-March period from the 2.6% rise in the previous quarter.

Any significant divergence from the expected reading might infuse some volatility around the USD and provide a fresh impetus to the AUD/USD pair. The focus will then shift to the US Core PCE Price Index – the Fed’s preferred inflation gauge – on Friday, which will play a key role in influencing the near-term USD price dynamics and help determine the near-term trajectory for the major.

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