On Tuesday, the sentiment-linked Australian Dollar underperformed against its major counterparts amid an otherwise poor day on Wall Street – when Dow Jones Industrial Average lost more than 1 percent as materials and energy stocks underperformed while information technology shares fared much better; its Nasdaq Composite actually decreased only 0.188%.

US Treasury Yields

Price action showed that US Treasury yields rose after solid retail sales data. Although overall retail sales missed their +0.8% consensus at 0.4%, data that excluded auto and gas purchases showed an incredible surge – coming in at +0.6% against their +0.2% estimate – suggesting American spending remains healthy.

US GDP:

Consumption accounts for the largest component of US GDP, so strong consumer spending would likely help support economic expansion and allay concerns about recession. Thus, bond yields jumped likely as traders priced in near-term cuts from the Federal Reserve; when sentiment soured further, risk-averse Australian Dollar was hurt as traders priced them out.

Australian Dollar Technical Analysis

On a daily chart, despite weakness in AUD/USD, this currency pair remains in a consolidation pattern. Prices recently rejected the 100-day Simple Moving Average (SMA), turning lower. Further losses through the midpoint of Fibonacci retracement level 0.6664 open the way back towards revisiting March low at 0.6568. Source: Dailyfx