The Australian dollar is down against the US dollar on Thursday.
The Aussie lost ground against the dollar in a long-overdue pullback after a 6-day winning streak.
Gains in the dollar were capped after the Fed left the door open to new monetary programs that would likely debase the buck further.
AUD/USD was lower by 47 pips (-0.72%) to 0.6508 as of 5pm GMT.
The currency pair has found resistance at 0.655 and swung lower thereafter but held onto 0.65. Yesterday the exchange rate rose 1.00%, leaving a weekly gain of +1.95%.
AUD: Momentum cools after winning streak
A sustained period of strength that had carried the Aussie over the big 0.65 level to the US dollar ran out of steam at the end of the month and before a long holiday weekend for many parts of the world.
The Aussie selling felt mostly technical, with profit-taking and month-end repositioning likely explaining some of the weakness. Australia remains well positioned in the coronavirus pandemic versus other nations, including the United States.
A possible source of weakness was the spat between Australia and China doesn’t seem to be going away. Officials on both sides of the Pacific talking tough and not climbing down. The longer the ill-relations roll on, the bigger the risk that it has some ramifications for trade between the two countries. There may also be some nerves creeping in before next Tuesday’s RBA meeting.
USD: Buck rebounds but Fed limits upside
The dollar held up against the Australian dollar, mostly as a function of Aussie weakness but the exchange rate clung onto the big 0.65 level in a sign of resilience. The dollar was held back by yesterday’s Federal Reserve meeting that was generally viewed as ‘dovish’ by investors.
The US currency was pressured by the Fed adding to the range of American businesses that would be entitled to direct lending from the Fed in the aptly named ‘Main Street lending program’. The Fed will print new money to lend to businesses that apply for the loans. Now firms with up to 15,000 employees and $5 billion in revenue will qualify for the program that has not yet started.
