AUD/USD slips to 0.7086, lowest level since 1 November
There's just no reprieve for risk assets as markets are still digesting the post-Fed and post-Powell reactions. The dollar benefited a little from the slight dovish tilt but it was risk assets that got battered as the Fed did not confirm or hint at any pauses to the current tightening cycle.
As mentioned yesterday, AUD/USD will look towards the Fed for clues as a break looks imminent after playing ping pong for most of the week. And it comes as the downside broke the 13 November low of 0.7164 post-Fed decision.
There is some support now from the September low around 0.7085 but at this stage sellers will be targeting yet another move towards the October lows once again. With the Fed refusing to bow down to Trump's wishes and the RBA not anywhere near confident to hike rates, monetary policy divergence is set to continue and that will still prove to be a bane for AUD/USD ahead of a possible test of the 0.7000 handle.
Currently, the 10-year bond yields spread sits around 41 bps in favour of Treasuries:
