AUDUSD Drops to 2-year Lows Amid General Risk-off Trading

AUDUSD Drops to 2-year Lows Amid General Risk-off Trading
As the USD continued to dominate the markets, the AUDUSD pair declined below 0.67, the lowest since June 2020, dropping 0.3% on Friday.
Sentiment has been bearish in the markets this week, hitting US stocks and commodities, but also weakening commodity-linked currencies such as the AUD or NZD.

Troubles in China undermine the AUD

According to data released on Friday, Chinese house prices fell 1.3% in August, which was their largest monthly decline in over seven years. The majority of China's economic growth is attributed to its heavily indebted real estate industry, which this year has been under tremendous pressure due to a cash shortage.

Other readings that revealed larger-than-anticipated increases in Chinese retail sales and industrial production in August were negated out by the poor housing data.

Chinese economic activity came to a standstill this year due to a string of COVID-related lockdowns, prompting the government to take multiple stimulus measures to support growth.

In other news, as per his recent testimony, RBA's Lowe said, "Now that inflation is as high as it is, we need to make sure that inflation returns to goal in a fair period." The decision-maker said that Australia was in a far better situation than the Fed since wages were still under check.

Bearish trend persists

The decline to new lows is taken negatively by market players as new selling orders could hit the AUDUSD pair. Therefore, the bearish outlook remains intact.

The next target could be at 0.65, especially if the Fed brings a hawkish surprise at its next week's meeting. 

Alternatively, the pair must climb above 0.6830 to cancel the immediate selling pressure. 

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