AUD/USD drops sharply and posts lowest weekly close since May

The Australian dollar was among the worst performers during the week. AUD/USD reversed sharply after the FOMC meeting and dropped from 4-week highs to a 6-month low. 

The pair peaked on Wednesday at 0.7778 and then, after the Federal Reserve announced a rate hike and signaled potential three rate hikes during 2017, turned to the downside. Initially broke 0.7430 and continued to decline over the next two days. On Thursday, consolidated below 0.7400 and on Friday fell under 0.7300. 

During Friday’s American session bottomed at 0.7265, the lowest level since June 3 and then bounced modestly to the upside. It was about to end the week hovering below 0.7300, posting the lowest daily close in months. 

Week ahead

As the end of the year approaches, volume across financial markets could start falling but volatility could remain elevated, particularly after the second rate hike in the US since the financial crisis. 

Regarding economic data, in the US a new estimation of 3Q GDP will be released, also the preliminary Services PMI and the personal income and spending report among others. 

In Australia, the central bank will release the minutes from its latest meeting while the government will publish the mid-year economic and fiscal outlook report.