AUD/USD clings to gains above 0.6500 as focus shifts to FOMC
- Real GDP in US contracted by 4.8% in first quarter.
- The FOMC is expected to keep its policy rate unchanged at 0.25%.
- US Dollar Index consolidates daily losses near 99.70.
The upbeat market mood on Wednesday provided a boost to the risk-sensitive AUD and allowed the AUD/USD pair reach its highest level since March 11th at 0.6547 on Wednesday. With the market action turning subdued ahead of the FOMC's monetary policy announcements, the pair has gone into a consolidation phase and was last seen gaining 0.52% on the day at 0.6524.
USD remains on the back foot ahead of FOMC
The data published by the US Bureau of Economic Analysis showed on Wednesday that the real Gross Domestic Product (GDP) in the US declined 4.8% on a yearly basis in the first quarter. However, this reading was largely ignored by the market participants, who shifted their focus to reports suggesting that remdesivir could become a treatment for coronavirus.
The US Dollar Index, which closed the last three trading days with losses, extended its slide as the greenback struggled to find demand as a safe-haven. At the moment, the index is down 0.27% on the day at 99.70.
Previewing the FOMC meeting, “an optimistic set of projections from the central bank and a hopeful and positive assessment for the US economy from Jerome Powell, especially with a number of states lifting restrictions, will reinforce the equity rally and could begin the end of the dollar panic trade,” said FXStreet analyst Joseph Trevisani.
During the Asian trading hours on Thursday, the Australian economic docket will feature the ANZ's Business Confidence and Activity Outlook data.
Technical levels to watch for