• Wed. May 29th, 2024

Australian Dollar moves on a downward trajectory ahead of US Retail Sales data

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  • Australian Dollar faced challenges on improved US Dollar amid market caution.
  • Australian central bank is expected to refrain from increasing interest rates, influenced by lower consumer confidence in January.
  • The decline in commodity prices contributed to downward pressure on the AUD.
  • China’s annual GDP grew by 5.2%, slightly lower than the 5.3% expected in the fourth quarter.
  • Upbeat US Treasury yields contributed to supporting the Greenback.

The Australian Dollar (AUD) continues its losing streak on Wednesday, struggling to find stability against the US Dollar (USD). In the previous session, the AUD/USD pair experienced a decline, influenced by a stronger Greenback, driven by upbeat US Treasury yields. Market participants have reduced their speculation on rate cuts from the US Federal Reserve (Fed). Heightened tensions in the Middle East conflict have also contributed to investor caution. Additionally, a decline in commodity prices, potentially reflecting fears of weaker demand from China, has weighed on the Aussie Dollar (AUD).

Australia’s Consumer Confidence data for January showed a contraction which has contributed to the sentiment that there might not be further policy tightening from the Reserve Bank of Australia (RBA) in its upcoming board meeting in February. This perception, in turn, is putting pressure on the AUD/USD pair.

China’s annual Gross Domestic Product (GDP) grew by 5.2% against the 5.3% expected in the fourth quarter. December’s Industrial Production (YoY) increased by 6.8%. which was expected to remain consistent at 6.6%. Retail Sales year-over-year came at 7.4%, falling short of the market consensus of 8.0%.

Chinese consumer prices experienced a third consecutive month of decline in December, and producer prices also saw a decrease. This suggests persistent deflationary cost pressures in the country. However, in a speech delivered at the World Economic Forum in Davos, Premier Li Qiang stated on Tuesday that China’s economy grew by approximately 5.2% in 2023. This growth rate is slightly better than the official target set by Beijing

The US Dollar Index (DXY) seems to continue its four-day winning streak, supported by recent remarks from Federal Reserve officials. Fed Governor Christopher Waller cautioned that, despite positive developments in the inflation outlook, the central bank is not rushing to outline plans for rate cuts.

Atlanta Fed President Raphael Bostic also suggested over the weekend that premature interest rate cuts could lead to inflation fluctuations. Bostic emphasized that the deceleration of inflation towards the central bank’s 2.0% target was expected to slow down in the coming months.

US NY Empire State Manufacturing Index saw a significant decline, dropping to 43.7 in January, well below the expected decrease of 5. Traders will likely monitor the upcoming US Retail Sales data for December. The expectation is for a slight growth in retail sales which could provide insights into consumer spending patterns.

Daily Digest Market Movers: Australian Dollar declines on improved US Dollar

  • Australian TD Securities inflation increased by 5.2% YoY in December from 4.4% in November.
  • Australia’s job advertisements improved by 0.1% in December, swinging from the previous decline of 4.6%.
  • People’s Bank of China (PBoC) maintained the rate on its medium-term facility steady at 2.5%, increasing the expectation that the Reserve Requirement Ratio will be reduced the following month.
  • Chinese Consumer Price Index (YoY) decreased by 0.3% in December, against the expected 0.4% decline. The monthly Consumer Price Index eased to 0.1%, compared to the market expectation of 0.2%. The yearly Producer Price Index fell by 2.7%, slightly exceeding the expected decline of 2.6%.
  • Barclays revised its forecast for the first Federal Reserve (Fed) rate cut on Friday, moving it to March from June. In a note released on Friday, Barclays analysts expressed their expectation for the Federal Open Market Committee (FOMC) to reduce the Fed Funds rate by 25 basis points at the March meeting.
  • US Bureau of Labor Statistics reported that the December Producer Price Index (PPI) figure was 1.0% year-on-year, compared to the previous reading of 0.8%. The Core PPI YoY arrived at 1.8%, down from 2.0% in November. Monthly, the headline and Core PPI indices remained flat at -0.1% and 0.0%, respectively.
  • US Bureau of Labor Statistics reported that the Consumer Price Index (CPI) surged to 3.4% YoY in December, exceeding both November’s 3.1% and the anticipated market figure of 3.2%. The monthly CPI growth for December showed a 0.3% increase, surpassing the market analysts’ estimated projection of 0.2%. The annual Core CPI stood at 3.9%, a slight decrease from November’s 4.0%, while the monthly figure remained steady at 0.3%, in line with expectations.

Technical Analysis: Australian Dollar hovers below the psychological level at 0.6600

The Australian Dollar traded near 0.6590 on Wednesday followed by the immediate psychological resistance level at 0.6600. A break above the barrier could push the AUD/USD pair to approach the major level at 0.6650 following the 14-day Exponential Moving Average (EMA) at 0.6680 and the psychological level at 0.6700. On the downside, the 50% retracement level at 0.6566 could act as a key support level followed by the major support at 0.6550.

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 weakest against the US Dollar.

USD EUR GBP CAD AUD JPY NZD CHF
USD 0.08% 0.11% 0.05% 0.25% 0.07% 0.12% 0.07%
EUR -0.08% 0.02% -0.03% 0.17% -0.01% 0.05% -0.02%
GBP -0.11% -0.04% -0.07% 0.13% -0.05% 0.00% -0.06%
CAD -0.05% 0.03% 0.06% 0.21% 0.02% 0.07% 0.00%
AUD -0.25% -0.17% -0.16% -0.23% -0.20% -0.13% -0.19%
JPY -0.07% 0.02% 0.04% -0.02% 0.20% 0.05% 0.00%
NZD -0.12% -0.04% -0.02% -0.07% 0.13% -0.05% -0.06%
CHF -0.06% 0.02% 0.05% -0.01% 0.19% 0.01% 0.06%

 

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