The Australian Dollar (AUD) saw a slight increase in value due to the enhancement of Australia’s Westpac Consumer Confidence Index released on Tuesday. The AUD/USD pair also received support from the hawkish stance of the Reserve Bank of Australia (RBA). Despite this positive development, investors are likely to remain cautious in anticipation of this week’s Australian inflation data. RBA Governor Michele Bullock mentioned during a recent press conference that the Board had discussed potential rate hikes, ruling out any rate cuts in the near future. This sentiment has led to reduced expectations for a RBA rate cut this year.
On the US Dollar front, the currency is trading on a softer note ahead of key economic data releases scheduled for later in the week. The revised US Gross Domestic Product (GDP) for the first quarter is set to be unveiled on Thursday, followed by the Personal Consumption Expenditure (PCE) Price Index on Friday. The US Dollar may limit its downside as strong US business activity data has dampened expectations for Federal Reserve rate cuts.
China Premier Li Qiang expressed confidence in China’s ability to achieve its full-year growth target of around 5%. However, he also cautioned against decoupling and protectionism, warning that such actions could increase economic operational costs globally. As Australia and China maintain strong trade relations, any changes in the Chinese economy could have an impact on the Australian market. The People’s Bank of China injected 300 billion Yuan via seven-day reverse repos on Tuesday, maintaining the reverse repo rate at 1.8%.
Australia’s Westpac Consumer Confidence saw a 1.7% month-over-month increase in June, rebounding from a slight decline the previous month. This marked the first increase in four months, reaching the highest level since February. In contrast, the CME FedWatch Tool reported that investors are pricing in nearly 67.7% odds of a Fed rate cut in September, compared to 61.5% a week earlier. Recent data shows that the US Composite PMI for June surpassed expectations, with both the Manufacturing PMI and Services PMI exceeding forecasts.
In terms of technical analysis, the Australian Dollar is hovering around 0.6650, with the AUD/USD pair exhibiting a neutral bias on the daily chart. The pair is consolidating within a rectangle formation, with the 14-day Relative Strength Index (RSI) slightly above the 50 level, indicating a potential bullish bias. Potential support levels for the AUD/USD pair include the 50-day Exponential Moving Average at 0.6615 and lower boundary of the rectangle at 0.6585. Resistance levels may be found near the upper boundary of the rectangle at 0.6695 and the psychological level of 0.6700.
In terms of currency performance today, the Australian Dollar was the strongest against the US Dollar, showing a positive percentage change. The heat map displays the percentage changes of major currencies against each other, with the base currency selected from the left column and the quote currency chosen from the top row. This information can provide valuable insights into how different currencies are performing relative to each other in the market.
