The Australian Dollar (AUD) continues its upward momentum in Thursday’s Asian session, supported by the Reserve Bank of Australia’s (RBA) hawkish hold and rising bets on a Federal Reserve rate cut. The RBA’s decision to keep the cash rate unchanged at 4.35% has bolstered the AUD, while weaker-than-expected Retail Sales data has led to speculation of Fed rate cuts later in the year, weighing on the US Dollar and benefiting AUD/USD. However, the RBA has indicated that the economic outlook remains uncertain, and traders will be monitoring the preliminary Australia Judo Bank Purchasing Managers Index (PMI) for further clues on the economy. Any signs of weakness in the Australian economy could prompt the central bank to lower borrowing costs, potentially impacting the AUD. Key US economic data releases and speeches, including the US Initial Jobless Claims, Housing data, Philly Fed Manufacturing Index, and Fed’s Neel Kashkari speech, will also be closely watched on Thursday and Friday.
The Reserve Bank of Australia delivered a hawkish hold at its June meeting, keeping the cash rate unchanged and signaling a willingness to take necessary actions to return inflation to target levels. RBA Governor Michele Bullock mentioned the option of raising rates, while ruling out the possibility of a rate cut. The first reading of the Australian Judo Bank Manufacturing PMI is expected to improve in June, further supporting the AUD. Additionally, Fed funds futures are pricing in a 67% chance of a September rate cut, following disappointing retail sales data, with expectations of 50 basis points of total rate cuts this year. The US Initial Jobless Claims are estimated to decline, adding to market sentiment surrounding the AUD/USD pair.
Technical analysis shows that the AUD/USD pair remains constructive, with the pair establishing a symmetrical triangle pattern since May. The pair is currently trading above the key 100-day Exponential Moving Average (EMA) on the daily chart, with bullish momentum in the 14-day Relative Strength Index (RSI) supporting further upside. A break above the upper boundary of the symmetrical triangle could attract buyers towards the 0.6700 psychological level, with further gains possible towards 0.6760. On the downside, the 0.6590-0.6600 zone serves as a crucial support level, with a breach potentially leading to further declines towards 0.6510 and 0.6465.
The table below shows the percentage change of the Australian Dollar (AUD) against major currencies for the day, with the AUD performing strongest against the Pound Sterling. Factors such as interest rates set by the Reserve Bank of Australia, the price of Iron Ore (Australia’s largest export), the health of the Chinese economy, inflation in Australia, growth rate, Trade Balance, and market sentiment all play a role in influencing the value of the Australian Dollar. The RBA’s interest rate decisions, China’s economic performance, Iron Ore prices, and the Trade Balance are key drivers that impact the AUD’s value.
In summary, the Australian Dollar’s recent gains are supported by the RBA’s hawkish hold and expectations of Fed rate cuts, leading to a positive outlook for the AUD/USD pair. Traders will closely monitor economic data releases and speeches from central bank officials for further guidance on the currency pair’s direction. Technical analysis suggests a constructive outlook for the AUD/USD pair, with key support and resistance levels to watch. Factors such as interest rates, Chinese economic performance, Iron Ore prices, and the Trade Balance will continue to influence the Australian Dollar’s value in the coming days.
