The AUD/USD declined by 0.20% to 0.6710 in Friday’s session, with the Australian Dollar weakening despite a weaker US Dollar. Comments from a “Fed whisperer” raised the odds of a 50-basis-point rate cut at the next Federal Reserve meeting, while RBA Governor Bullock remains hawkish on rates due to high inflation.
The Australian economic outlook remains uncertain, with the RBA taking a cautious approach to rate cuts. Financial markets now anticipate a modest 0.25% cut in 2024, reflecting the RBA’s concerns about inflation and commitment to economic growth.
Key Market Movers: AUD/USD Declines Limited by Dovish Fed
- US Treasury Yields dropped following reports of a possible 50bps cut at the next FOMC meeting.
- Markets are pricing in a 25 bps rate cut next week, with a 41% chance of a 50 bps cut.
- Wall Street Journal reporter Nick Timiraos hinted at a close decision at the Fed meeting.
- RBA Governor Bullock maintains a hawkish stance, citing high inflation as a reason to hold rates steady.
AUD/USD Technical Analysis: Mixed Momentum with Resistance at 20-day SMA
The pair’s decline in Friday’s session suggests mixed momentum, with RSI pointing to declining buying pressure and MACD indicating steady selling pressure. Support levels are at 0.6650, 0.6600, and 0.6550, while resistance levels are at 0.6735, 0.6750, and 0.6800.
Australian Dollar FAQs
Factors driving the Australian Dollar include RBA interest rates, Chinese economic health, inflation, growth rate, trade balance, and market sentiment. RBA’s goal is to maintain stable inflation, with interest rate adjustments impacting AUD value. Chinese economic performance directly affects AUD due to trade relations. Iron Ore prices, Australia’s largest export, also influence AUD value. Trade balance surplus strengthens AUD.