AUD/USD reverses direction amid USD rally, drops to 0.7370 area
- AUD/USD came under renewed bearish pressure in American session.
- US Dollar Index rose to fresh weekly high of 92.30.
- Fed's Clarida sees Fed announcing tapering later in the year.
The AUD/USD pair climbed to its highest level since mid-July at 0.7427 on Wednesday but changed its direction during the American trading hours. As of writing, the pair was down 0.24% on a daily basis at 0.7376.
Hawkish Fed commentary lifts DXY
Earlier in the day, the renewed USD weakness following the disappointing labour market data helped AUD/USD continue to push higher. The Automatic Data Processing (ADP) Research Institute announced that private-sector employment rose by 330,000 in July, missing the market consensus of 695,000 by a wide margin. With the initial reaction, the US Dollar Index (DXY) dropped below 92.00.
However, Fed Vice Chair Richard Clarida's comments on the policy outlook provided a boost to the greenback and the DXY reached its strongest level in a week at 92.30.
Clarida said that he expects the pre-set conditions for raising the policy rate to be met toward the end of 2022. "I can certainly see the Fed announcing tapering later this year," Clarida added. Currently, the DXY is up 0.22% on the day at 92.27.
On Thursday, June Trade Balance will be the only data featured in the Australian economic docket. This report, however, is not expected to impact AUD/USD's movements and investors are likely to remain focused on the USD's market valuation.
Technical levels to watch for