• AUD/USD has dropped back to near the 0.7500 level as the US dollar strengthens after the Fed minutes release.
• That means the pair has now dropped over 1.0% on the day, with lower equity and commodity prices also weighing.

The US dollar is ramping up in wake of the release of the latest Fed meeting minutes and this has pushed AUD/USD to fresh session lows back below the 0.7500 level. That means the pair is now trading lower by more than 1.0% on the day, having already been under pressure prior to the release of the Fed minutes, likely as a result of the sharp pullback being seen across global equity and commodity markets. The Aussie has a strong correlation to both risk appetite and the prices of commodities such as oil, copper and other energy and metal prices.

With the Aussie now trading back in the 0.7500 area, it has more than unwound Tuesday’s post-hawkish RBA meeting gains that saw it at one point rally as highs as the 0.7660s on Tuesday. That's a roughly 2.0% drop from weekly peaks. Now that AUD/USD is trading back within last week’s ranges (when it spent practically the entire week within a 40 pips of the 0.7500 level), longer-term Aussie bulls will be questioning whether they want to buy into the dip.

Though still substantially higher versus mid-March lows, the pullback in the last two days in US and global equity markets doesn’t look healthy. If global yields continue to rally on expectations of central bank tightening, that doesn’t bode well for a recovery back to last week’s peaks. That would bode poorly for the highly risk-sensitive Aussie, and well for the safe-haven US dollar. Much will depend on whether commodity traders buy the dip, with oil now approaching key support.