AUD/USD Rises Amid Weaker US Dollar and Fed Rate Cut
- The AUD/USD rose by 0.70% to 0.6815 in Thursday’s session, marking the fourth consecutive session of gains for the pair.
- The US Dollar weakened following the Federal Reserve’s 50-basis-point rate cut, driven by concerns about global economic growth and rising unemployment.
- The RBA’s hawkish stance also favored the Aussie, with financial markets anticipating a modest interest rate reduction in 2024 to combat inflationary pressures.
Market Insights: Australian Dollar Strengthens Post-Fed Decision
- The US dollar weakened due to increased selling interest after the Fed’s rate cut, benefiting the AUD.
- Rising copper and iron ore prices also supported the Aussie, despite concerns about China’s housing and industrial sectors.
- The RBA maintained its Official Cash Rate steady at 4.35%, signaling a cautious approach amid inflationary pressures.
- RBA Governor Michelle Bullock’s cautious outlook suggests rate cuts are unlikely in the near future.
- Market anticipates rate cuts in late 2024, with a 70% probability of a 25-basis-point cut by December.
- August’s mixed labor market report in Australia showed steady unemployment rate and increased employment change.
Technical Analysis: AUD/USD Outlook Positive
Indicators show positive buying traction with the RSI and MACD on the rise, supporting a bullish bias for the pair. Maintaining the 0.6800 area is crucial for buyers.
Australian Dollar FAQs
- Interest Rates: RBA sets interest rates, impacting AUD. Higher rates support the currency.
- Chinese Economy: Health of China’s economy influences AUD due to trade relations.
- Iron Ore Prices: Price of iron ore affects AUD as it is a major export for Australia.
- Trade Balance: Positive balance strengthens AUD as demand for exports increases.