AUD/USD hangs near 4-month lows, below 0.7600 handle
• Tumbles to over 4-month lows on weaker wage-growth data.
• Fails to benefit from broad-based USD weakness/sliding US bond yields.
• Focus shifts to US CPI and monthly retail sales data.
After yesterday's brief pause, the AUD/USD pair came under some renewed selling pressure and tumbled to over 4-month lows on Wednesday.
Today's release of wage growth data from Australia fell short of consensus estimates and grew 0.5% in the third quarter. As an important input for overall inflation, the market reaction to today’s release clearly suggests having a dovish implication on the monetary policy and prompted some fresh selling.
Adding to this, weaker sentiment around commodity space, mainly driven by a sell-off in oil markets after the IEA slashed global demand growth forecast for 2017/2018 on Tuesday, exerted additional downward pressure on commodity-linked currencies, including the Australian Dollar.
The pair failed to benefit from persistent US Dollar selling bias, led by mounting uncertainty over the US tax legislation. Even sliding US Treasury bond yields, which tends to underpin demand for higher-yielding currencies, failed to stall the pair's slide below the 0.7600 handle for the first time since early July.
Focus now shifts to important US macro data - the latest inflation figures and monthly retail sales. With December Fed rate hike move nearly priced in the market, even a slight disappointment could trigger a fresh leg of USD downslide and provide some immediate respite for the major.
Technical levels to watch
Any recovery attempts back above the 0.7600 handle might now confront fresh supply near the 0.7620 region, above which a bout of short-covering could lift the pair towards 0.7655-60 hurdle.
On the flip side, weakness below the 0.7575-70 region now seems to drag the pair towards 0.7540 intermediate support en-route the key 0.75 psychological mark.