Cautious Market Mood Costs a Lot
The AUD/USD currency pair has renewed intraday lows around 0.7305, while the market sentiments have turned around to a cautious mood in the course of the Asian session on Thursday after the risk-on event of the day.
AUD/USD price chart. Source TradingView
The Australia-focused pair broke a two-day downward trend when it rose to its highest in two weeks on Wednesday as the market’s risk appetite gained an improved status as news began to filter in that suggested a diplomatic resolution to the ongoing war between Russia and Ukraine. Nevertheless, anxieties in the market in the lead-off to major events and the mixed news about the economy posed a challenge to the initial optimism of investors and weighed heavily on the pair as a result of its risk-sensitive status.
Due to that, the AUD/USD pair did not regard the increased Australian Consumer Inflation Expectation for the month of March, which was at 4.9% against the initially expected 4.6%.
Compromise for Peace
There are indications that Ukraine is willing to offer compromises, as it has withdrawn its NATO membership application if Russia is also willing to do the same. Russian top negotiators have actually said that Moscow will not be considering any compromises. The Russian diplomats, in the same vein, also debunked allegations by the United States that Russia is using biological and chemical weapons in Ukraine.
It is equally noteworthy that the latest inflation expectation in the United States with regards to the ten-year break-even inflation rate of the St. Louis Federal Reserve report while there are fears of a 50 basis points interest rate increase by the United States Federal Reserve. The inflation barometer stepped back of late to 2.84% following its renewal of an all-time high point with up to 2.90% the day before that.
In Australia, the news that the Australian PM Scott Morrison plans to spend 38 million Australian dollars on improving military spending was mainly overlooked while the country is battling with a natural disaster on the East Coast.
Having this background, the S&P 500 futures and the American ten-year Treasury bond yields have failed to continue the days from the previous day at the time of putting this news together.
The AUD/USD currency price might remain under pressure as it heads into significant data periods and events. Among such is the peace negotiation between Russia and Ukraine that has become very necessary for the pair to rise again.