Coming Under Pressure

AUD/USD whipsawed on Wednesday, as above-forecast CPI reading out of the U.S. roiled markets, boosting hawkish Fed bets but also fuelling recessionary fears. The pair sank in reaction to the release, before staging a firm rebound into the WMR fix and then easing off towards neutral levels into the close.

• The rebound in the London/NY crossover may have been facilitated by a hawkish surprise provided by the Bank of Canada, which unexpectedly raised its key policy rate by a full percentage point, triggering a downswing in USD/CAD.
• Cross-asset signals were mixed. Although BBG Commodity Index edged higher, European & U.S. equity benchmarks posted losses come the end of play.
• AUD/USD has shed a handful of pips this morning as light risk-off flows emerge in G10 FX space. Comments from '22 FOMC voter Mester might be a catalyst, with the policymaker beating the hawkish drum & kicking the can down the road re: potential support for a 100bp rate rise.
• AUD/USD last deals at $0.6747, down 14 pips on the day. Bears look for a fall through Mar 9, 2020 low of $0.6685 towards the 0.764 proj of the Apr 5 - May 12 - Jun 3 price swing at $0.6647. Bulls keep an eye on Jun 28 high of $0.6964.
• Australia's labour force survey will grab attention today. Employment is expected to have grown by a further 30k in June, according to Bloomberg consensus forecast. Coupled with an anticipated unchanged participation rate of 66.7%, this would yield a modest downtick in the unemployment rate to 3.8%.
• Worth noting that consumer inflation expectations will also be published today.