- The Australian Dollar recovers its losses as soft US inflation data raises expectations of Fed reducing rates.
- China’s Trade Balance for June came in at $99.05 billion, widening from the previous figure of $82.62 billion.
- Fed’s Goolsbee stated that the US economy appears to be on track to achieve 2% target inflation.
The Australian Dollar (AUD) trades around its six-month high of 0.6798 recorded in the previous session. The AUD/USD pair found support as the US Dollar (USD) weakened following softer-than-expected US Consumer Price Index (CPI) data in June. This has increased expectations of a potential Federal Reserve (Fed) rate cut in September. Traders await the Michigan Consumer Sentiment Index and US Producer Price Index (PPI), due on Friday, to gain further impetus on the US economy.
Additionally, China, a close trade partner of Australia, released its Trade Balance data for June, which shows a trade surplus of $99.05 billion, widening from the previous figure of $82.62 billion. Any change in the Chinese economy could impact the Australian Dollar.
The AUD may extend its upside as speculation grows that the Reserve Bank of Australia (RBA) might delay the global rate-cutting cycle or even raise interest rates again. Persistently high inflation in Australia prompts the RBA to maintain a hawkish stance.
The US Dollar (USD) recovers its losses amid improved US Treasury yields. Investors in the fed funds futures market have increased their bets on a rate cut by the US Federal Reserve starting in September. According to CME Group’s FedWatch Tool, markets are now pricing in nearly 89% odds of a rate cut at the September Fed meeting, up from 73% on Wednesday.
Daily Digest Market Movers: Australian Dollar appreciates on risk-on sentiment
- China Exports (YoY) rose by 8.6% vs. 8.0% expected and 7.6% previous. Meanwhile, Imports (YoY) declined by 2.3% against the previous rise of 2.8%.
- Federal Reserve Bank of Chicago President Austan Goolsbee said on Thursday that the US economy appears to be on track to achieve 2% inflation. This suggests Goolsbee is gaining confidence that the time for cutting interest rates may soon be approaching. He also stated “My view is, this is what the path to 2% looks like,” Goolsbee said, according to Reuters.
- The US Consumer Price Index (CPI) declined by 0.1% month-over-month in June, marking its lowest level in more than three years. On a yearly basis, the headline CPI increased by 3.0% in June, down from a 3.3% rise in May and below the market consensus of 3.1%.
- The core CPI, which excludes volatile food and energy prices, rose by 3.3% year-over-year in June, compared to May’s increase of 3.4% and the same expectation. Meanwhile, the core CPI increased by 0.1% month-over-month, against the expected and prior reading of 0.2%.
- Australia’s Consumer Inflation Expectations for July came in at 4.3%, slightly lower than the previous reading of 4.4%.
- Federal Reserve Board Governor Lisa Cook stated on Wednesday, “My baseline forecast…is that inflation will continue to move toward target over time, without much further rise in unemployment,” according to Reuters.
- On Wednesday, Fed Chair Jerome Powell emphasized the need to closely monitor the labor market, noting that it has significantly deteriorated. Additionally, Powell expressed confidence in the downward movement of inflation.
- On Tuesday, Fed Chair Jerome Powell answered questions before the Senate Banking Committee on the first day of his Congressional testimony. Powell stated, “More good data would strengthen our confidence in inflation.” He emphasized that a “policy rate cut is inappropriate until the Fed gains greater confidence that inflation is headed sustainably toward 2%.” He also noted that “first-quarter data did not support the greater confidence in the inflation path that the Fed needs to cut rates.”
Technical Analysis: Australian Dollar hovers around 0.6750
The Australian Dollar trades around 0.6760 on Friday. The analysis of the daily chart shows that the AUD/USD pair consolidates within an ascending channel, indicating a bullish bias. Furthermore, the 14-day Relative Strength Index (RSI) remains above the 50 level, confirming the ongoing bullish momentum.
The AUD/USD pair may retest the upper boundary of the ascending channel at approximately 0.6790 and the psychological level of 0.6800.
On the downside, the AUD/USD pair may find support around the 50-day Exponential Moving Average (EMA) at 0.6698. Further support appears around the lower boundary of the ascending channel at 0.6680. A break below this level could push the pair toward the throwback support around 0.6590.
AUD/USD: Daily Chart
AUSTRALIAN DOLLAR PRICE TODAY
The table below shows the percentage change of Australian Dollar (AUD) against listed major currencies today. Australian Dollar was the strongest against the Japanese Yen.
| USD | EUR | GBP | JPY | CAD | AUD | NZD | CHF | |
|---|---|---|---|---|---|---|---|---|
| USD | -0.02% | -0.01% | 0.05% | -0.07% | -0.16% | -0.12% | -0.03% | |
| EUR | 0.02% | 0.02% | 0.12% | -0.06% | -0.15% | -0.11% | -0.04% | |
| GBP | 0.00% | -0.02% | 0.10% | -0.09% | -0.18% | -0.13% | -0.06% | |
| JPY | -0.05% | -0.12% | -0.10% | -0.20% | -0.25% | -0.21% | -0.13% | |
| CAD | 0.07% | 0.06% | 0.09% | 0.20% | -0.08% | -0.04% | 0.02% | |
| AUD | 0.16% | 0.15% | 0.18% | 0.25% | 0.08% | 0.05% | 0.12% | |
| NZD | 0.12% | 0.11% | 0.13% | 0.21% | 0.04% | -0.05% | 0.08% | |
| CHF | 0.03% | 0.04% | 0.06% | 0.13% | -0.02% | -0.12% | -0.08% |
