The Australian Dollar (AUD) faced depreciation ahead of the release of the Fed’s Beige Book on Wednesday. Australia’s Monthly Consumer Price Index exceeded expectations, rising 3.6% YoY in April. This strong data could potentially lead to another rate hike by the Reserve Bank of Australia (RBA). The US Dollar rebounded, supported by higher US Treasury yields, which impacted the AUD/USD pair negatively.
The risk aversion sentiment and strength in the US Dollar undermined the Australian Dollar, with the US Dollar Index (DXY) trading higher. Neel Kashkari, President of the Federal Reserve Bank of Minneapolis, suggested that a rate hike might still be possible, leading to a rebound in the USD. However, the likelihood of the Federal Reserve implementing a rate cut in September decreased slightly.
In the international market, the IMF Deputy Managing Director announced an upgrade in China’s economic growth target, while Australia’s Monthly Consumer Price Index outperformed expectations. Additionally, the US Housing Price Index and Australia’s Retail Sales data showed mixed results. Any economic changes in China could significantly impact the Australian market due to their close trade relationship.
Technical analysis of the Australian Dollar suggests a bullish bias for the AUD/USD pair, with potential for reaching a four-month high. Key support levels include the 21-day Exponential Moving Average and the psychological mark of 0.6600. The heat map shows percentage changes of major currencies against the AUD, with the Australian Dollar showing strength against the Canadian Dollar.
Factors influencing the Australian Dollar include interest rates set by the Reserve Bank of Australia, the health of the Chinese economy, the price of Iron Ore, inflation in Australia, trade balance, and market sentiment. The RBA influences the AUD through interest rate adjustments, while China’s economic performance directly impacts the Australian Dollar due to their trade relationship. Iron Ore prices and the Trade Balance also play a significant role in determining the value of the Australian Dollar in the international market.
In conclusion, the Australian Dollar faced depreciation ahead of the Fed’s Beige Book release, impacted by strong economic data and the rebound of the US Dollar. Factors such as interest rates, Chinese economic performance, and commodity prices play a crucial role in determining the value of the Australian Dollar in the global market. Traders and investors should stay informed about these factors to make informed decisions regarding the Australian Dollar and its pairs in the Forex market.
