AUD / USD is trading around 0.7155 at the beginning of the Asian session on Wednesday. The Aussie pair eased the previous day even though it is still the highest range since April 2019, which was printed on Monday.
The resulting movement can be traced to the weakening of the US dollar ahead of the Federal Reserve's main monetary policy. However, risk catalysts play their part to tame the bouncing greenback and keep the pair afloat.
Despite bouncing from its lowest since 2018, the US currency failed to pull back bulls because traders doubted American policymakers would be able to sign the much-awaited phase 4 (fiscal package) coronavirus bill.
The latest update from US House Speaker Nancy Pelosi confirms market expectations that the two parties, the ruling Republican Party and the Democratic opposition party, are still far from reaching any agreement.
This joins with concerns about coronavirus revival (COIVD-19). US President Donald Trump recently submitted an agreement with Kodal medicines and renewed vaccine hopes.
The AUD USD Shaky Factor
Elsewhere, the US-China struggle and the mixed economy of the United States offered nothing even though the Federal Reserve (Fed) extended the loan facility which was scheduled to end on or around September 30 to December 31.
Against this background, a gloomy market sentiment with Wall Street retreating from the recent positive trajectory while US 10-year Treasury yields are revisiting sub-0.60% territory.
Looking ahead, the second quarter Consumer Price Index (CPI) (Q2) from Australia is a direct catalyst for the pair. The main CPI is expected to drop from + 0.3% to -2.0% while the Trimmed Mean RPI can shrink from 0.5% to 0.1% every quarter.
Even if the figure tends to be bleak, the price of AUD / USD can support the weakening of the US dollar, except for minor withdrawals in cases where actual figures meet estimates. Conversely, optimistic data will help prices to return to the 0.7200 range.
As such, quotations are on their way to printing the fourth consecutive monthly increase to revisit the highest market at the end of February and April in 2019.
The lack of new catalysts pushed market participants to extend the previous bearish bias to the US dollar. The same thing helped commodities and maintained strength while equities also supported expectations of further stimulus amid mixed data from the US.
Policies Taken by the US Government
The US currency continues to bear the brunt of policymakers' inability to approve the much-awaited fiscal plan after their European counterparts were delighted to be marked by a large package the previous week.
The US senator said recently trapped in an unemployment benefits claim that would soon end while the total measure of aid, Democrats supported $ 3.5 trillion in contrast to the Republican proposal of $ 1.0 trillion, also remained a major hurdle.
US Senate Majority Leader Mitch McConnell said on Monday the Republican Senate would soon introduce a new coronavirus assistance program. In addition to the policy deadlock, coronavirus (COVID-19) also injured the world's largest economy because there are more than 4.0 million cases that together describe a 2.0 pandemic wave.
New cases in Victoria Australia are also on the rise but the rate of increase is minimal compared to America. US-China tensions and lack of uniformity in the American economy are also the reasons behind the latest greenback's downfall.
Looking ahead, no high impact data will encourage traders to stretch the previous bullish bias. However, buyers seem to retreat late and allow corrections in case of positive USD news.
It is worth mentioning that RBA Assistant Governor Christopher Kent cites opportunities for further bond purchases to maintain a yield target of 0.25%, which in turn can offer withdrawal to the AUD / USD price.
