- AUD/USD bears keep their defensive mode intact below 0.6900.
- The USD holds the upper hand in a climate of risk aversion, the Powell hawk.
- The Aussie is watching retail sales data in the critical US NFP week ahead.
AUD/USD is trading below 0.6900, starting a brand new week on the back foot, as US Dollar bulls hold the upper hand after hawkish rhetoric from Fed Chairman Jerome Powell during his appearance at the Jackson Hole Symposium on Friday.
Powell, in his prepared remarks on Day 2 of the annual Fed event, said “restoring price stability will likely require tight policy to continue for” some time, adding that the decision on the September’s rate hike will depend on all of the data since the July meeting.
The US Dollar staged a strong V-shaped rally on its comments, despite the retracement in Treasury yields across the curve. The negative change in the market’s perception of risk sentiment helped the safe-haven greenback rise, as major Wall Street indices fell around 3.50% after Powell poured cold water on the idea of a Fed pivot that could jeopardize its war on inflation.
Heading into a new week, risk flows appear to be expanding in Asian trading on Monday, reflecting the submissive tone of the Aussie high yield. The bulls also remain at bay, awaiting Australian retail sales data for July, due out at 01:30 GMT. The country’s consumer spending is expected to grow 0.3% over the forecast period, from 0.2% previously.
Retail sales volumes in Australia rose 1.4% in the June quarter of 2022, hitting a new record high, for the third quarter in a row, the Australian Bureau of Statistics (ABS) announced around a year ago. month.
The pair will also take inspiration from general market sentiment and Fed official Lael Brainard’s speech in the coming week on US non-farm payrolls. China’s manufacturing and services PMIs will also be watched closely for further clues to the health of Australia’s biggest trading partner, China.