• AUD/USD remained defensive on Friday after closing 0.85% lower on Thursday.
• The Australian dollar came under pressure from rising expectations for a Federal Reserve rate hike and sticky U.S. producer inflation.
• Markets are now pricing a 70% probability of a Fed rate hike on September 16, up from 60% on Thursday.
• Surging global bond yields are weighing on the Australian dollar, with the U.S. 10-year Treasury yield up 12 basis points and nearing 5%.
• U.S. crude prices settled 6.7% higher as escalating Middle East tensions worsened risk sentiment.
• U.S. August CPI data due Friday will be closely watched for clues on the Fed’s policy outlook, with a hotter-than-expected reading likely to weigh further on the Australian dollar.
• Immediate resistance is located at 0.7238(Higher BB), any close above will push the pair towards 0.7255(23.6%fib).
• Support is seen at 0.7154(38.2%fib) and break below could take the pair towards 0.7123 (Sep2nd low ).
Recommendation: Good to sell around 0.7170, with stop loss of 0.7240 and target price of 0.7120
