AUD/USD struggles to maintain a price over 0.6720 due to risk aversion ahead of FOMC minutes

The AUD/USD pair is under pressure throughout the Asian session to maintain above the immediate resistance level of 0.6720. As the risk-aversion theme influences the Australian Dollar, it is projected that the Aussie asset will retest the round-level support at 0.6700.

The negative close of the S&P500 on Tuesday and the dismal performance of the 500-stock U.S. index on a larger scale highlight market participants' pessimism. On Tuesday, the US Dollar Index (DXY) turned positive after tenaciously defending the 103.00 support. In contrast, demand for US government bonds soared, leading in a decline to 3.76 percent for 10-year Treasury yields.

Prior to the release of the Federal Open Market Committee (FOMC) minutes, there has been a significant spike in demand for the US Dollar Index. Investors eagerly await monetary policy outlook indicators for CY2023.

The current tight labor market and low unemployment rate in the United States present the Federal Reserve (Fed) with a considerable challenge in its pursuit of a 2% inflation rate. A continuation of the labor market's greater monthly job gains is attracting higher employment expenses to compensate for the labor shortage, which may encourage future retail demand.

The Australian Dollar is failing to capitalize on Caixin Manufacturing PMI data that exceeded expectations. IHS Markit reported economic data of 49.0, which is higher than the consensus estimate of 48.8 but lower than the prior release of 49.4. The market anticipated a decline in PMI figures after detecting negative signals in China's official Manufacturing PMI data and the precarious condition of Covid-19 in China.