- AUD/USD gained some traction in reaction to the better-than-expected Australian GDP print.
- Some follow-through USD buying, global growth concerns continued acting as a headwind.
- A positive risk tone helped limit the downside as traders eye US data for a fresh impetus.
The AUD/USD pair attracted some buying during the early part of trading on Wednesday, albeit struggled to capitalize on the move and met with a fresh supply in the vicinity of the 0.7200 mark. The pair was last seen trading with modest intraday gains, around the 0.7180-0.7185 region, up over 0.15% for the day.
The US dollar built on the overnight solid bounce from over a one-month low and remained well supported by rising US Treasury bond yields, bolstered by Fed Governor Christopher Waller's hawkish remarks. Speaking at an event in Frankfurt on Monday, Waller backed the case for a 50 bps rate hike for several meetings until inflation eases back toward the central bank’s goal.
Furthermore, concerns about softening global economic growth turned out to be another factor that benefitted the greenback's relative safe-haven status. This, to a larger extent, overshadowed the better-than-expected Australian GDP print and failed to assist the AUD/USD pair to capitalize on its modest uptick, rather attracted some selling near the multi-week high touched the previous day.
The government data showed that the Australian economy expanded by 0.8% during the first quarter of 2022 as against the 0.7% rise anticipated. This, however, marked a sharp deceleration from the 3.4% growth reported in the previous quarter and failed to provide any meaningful impetus to the AUD/USD pair. The subsequent pullback supports prospects for additional intraday losses.
The downside, however, remains cushioned amid a goodish recovery in the US equity futures. The mixed fundamental backdrop warrants some caution before placing aggressive directional bets. Traders now look forward to the US economic docket, featuring the release of IS Manufacturing PMI and JOLTS Job Openings, for some impetus later during the early North American session.