Australian Dollar Drops On Fed Rate Hike Worries
29 August 2022 - 2:39PM
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The Australian dollar fell against its major counterparts in the
Asian session on Monday, as Asian markets followed Wall street
lower, as comments from Federal Reserve Chair Jerome Powell sparked
concerns about the possibility of more aggressive rate hikes to
tame inflation.
In his speech at the Jackson Hole symposium on Friday, Powell
said that the central bank is likely to keep rates at higher levels
to restore price stability.
Powell acknowledged the central bank's efforts to combat
inflation will cause "some pain" but argued a failure to restore
price stability would mean "far greater pain."
Powell reiterated the Fed's resolve to bring inflation back to
its 2 percent target, declaring that the "economy does not work for
anyone" without price stability. He added that the central bank
would use its tools "forcefully" to bring demand and supply into
better balance.
Preliminary data from the Australian Bureau of Statistics showed
that Australia's retail sales grew at the fastest pace in four
months in July.
Retail sales gained by more-than-expected 1.3 percent
month-on-month in July, faster than the 0.2 percent rise in
June.
The aussie was lower against the euro and the loonie, touching
1-week lows of 1.4512 and 0.8942, respectively. The aussie is seen
finding support around 1.47 against the euro and 0.87 against the
loonie.
The aussie touched 0.6841 against the greenback, its lowest
level in nearly six weeks. Next key support for the aussie is seen
around the 0.66 level.
The aussie reached as low as 1.1206 against the kiwi. If the
aussie drops further, 1.10 is possibly seen as its next support
level.
In contrast, the aussie was higher against the yen, with the
pair trading at 95.06. Immediate resistance for the currency is
seen around the 98.00 level.
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