AUD/USD RETREATS FROM ONE-MONTH HIGH TO 0.6650 AS GROWTH FEARS JOSTLE WITH RBA HAWKS

• AUD/USD fades corrective bounce after snapping four-day uptrend, reversing from the highest level in a month.
• RBA’s Lowe defends hawkish surprise by citing inflation woes, Australia Q1 GDP growth rate eases.
• Recently softer China data join fears of global economic slowdown to exert downside pressure on Aussie pair.
• Australia trade numbers, risk catalysts eyed for clear directions.

AUD/USD stays depressed around 0.6650 after reversing from a one-month high. In doing so, the quote struggles to find traction as hawkish concerns about the Reserve Bank of Australia (RBA) joins growth fears to challenge the Aussie bulls. With this, the risk-barometer pair stays clueless amid the early hours of Thursday’s Asian session, after snapping four-day uptrend the previous day.

The recent challenges to the major economies, as perceived from the latest downbeat statistics from the United States, China, Australia, Europe and the UK, renew recession fears and weigh on the AUD/USD price.. Adding strength to the economic pessimism are the concerns surrounding higher interest rates from the top-tier central banks, especially after the latest hawkish surprises from the Reserve Bank of Australia and the Bank of Canada (BoC).

That said, China’s headline Trade Balance deteriorates to $65.81 billion versus the $92.0 billion expected and $90.21 billion previous readings. That said, the Exports and Imports came in mixed with the former falling past -0.4% expected and 8.5% previous readings to -7.5% YoY whereas the latter improves to 2.3% from -0.8% market forecasts and 4.2% prior. On the other hand, Aussie Q1 GDP rose 0.2% QoQ compared to 0.5% previous readings and 0.3% market forecasts. On the same line, the yearly GDP came in as 2.3% versus the analysts’ estimation of 2.4% YoY and 2.7% previous readings.

Even so, RBA Governor Philip Lowe signaled further rate hikes from the Aussie central bank and propelled the five-day uptrend of the Aussie pair. That said, the policymaker said, “Some further tightening of monetary policy may be required, depending on how economy and inflation evolve.” It should be known that the RBA surprised markets for the second time in a row by announcing a 25 basis points (bps) rate hike on Tuesday.

It should be noted that the latest Organisation for Economic Co-operation and Development (OECD) report, published Wednesday, mentioned, “The global economy is set for a weak recovery over the coming years as persistent core inflation and tighter monetary policy weigh on demand.”

While portraying the mood, Wall Street closed in the red whereas commodities and Antipodeans closed in the red. Further, the benchmark US 10-year Treasury bond yields rose the most in five weeks to 3.79% while the two-year counterpart marched to 4.52% at the latest.

Looking forward, Australia Trade Balance for April and the US weekly Initial Jobless Claims will be eyed for clear directions. However, major attention should be given to the risk catalysts and the yields as the latest shift in the market’s sentiment weighs on the risk-barometer pair.