AUD/USD keeps the red below mid-0.6600s post-US macro data, Credit Suisse woes underpin USD
- AUD/USD meets with a fresh supply on Wednesday amid a blowout intraday USD rally.
- Credit Suisse crisis, bets for a 25 bps Fed rate hike in March continue to boost the buck.
- The disappointing US macro data does little to influence the USD or provide any impetus.
The AUD/USD pair comes under fresh selling pressure on Wednesday, after failing to find acceptance above the 0.6700 mark, and continues to drift lower through the early North American session. The pair maintains its offered tone near the lower end of its daily range, around the 0.6640-0.6635 region and reacts little following the release of the US macro data.
The US Dollar catches aggressive bids in reaction to fresh worries about the European banking sector, fueled by negative news surrounding the Swiss lender Credit Suisse, and attracts some intraday sellers around the AUD/USD pair. In fact, the top shareholder of the troubled Swiss bank ruled out investing any more as a bigger holding would bring additional regulatory hurdles. The headwinds fuel speculations that the bank will indeed default and triggers a fresh wave of the global risk-aversion trade. This is evident from massive sell-off across the global equity markets, which, in turn, provides a strong boost to the safe-haven buck and weighs on the risk-sensitive Aussie.
Apart from this, reviving bets for at least a 25 bps rate hike by the Federal Reserve at its next meeting on March 21-23 seems to lend additional support to the Greenback, which remains unaffected by the disappointing US economic releases. In fact, the US Bureau of Labor Statistics reported that the Producer Price Index (PPI) unexpectedly declined by 0.1% in February and the yearly rate decelerated more than anticipated, to 4.6% from 5.7% in January. Furthermore, the core PPI, which excludes food and energy prices, fell short of market estimates, remaining flat during the reported month and falling to a 4.4% YoY rate from 5.4% recorded in the previous month.
Separately, the US monthly Retail Sales fell by 0.4% in February as compared to the strong 3.2% rise in the previous month and the 0.3% decline expected. Adding to this, the New York Fed's Empire State Manufacturing Index plunged to -24.6 for the current month, missing consensus estimates pointing to a fall to -8 from the -5.8 previous. The weaker data, however, is largely offset by fears about a broader systemic crisis, which continues to benefit the USD. This, along with the Reserve Bank of Australia's (RBA) dovish shift, signalling that it might be nearing the end of its rate-hiking cycle, suggests that the path of least resistance for the AUD/USD pair is to the downside.
Technical levels to watch