- AUD/USD rose to four-month highs beyond 0.6700.
- The rebound in the Dollar weighed on the pair.
- The Australian labour market report came in mixed in April.
The mild rebound in the US Dollar (USD) sparked some renewed selling bias in broad risky assets, motivating AUD/USD to return to the negative zone after hitting fresh four-month peaks just above the 0.6700 barrier on Thursday.
Additionally, the USD met some fresh buying orders as investors continued to digest the release of US inflation data tracked by the Consumer Price Index (CPI), which indicated a decline in April. This reinforced investors' anticipation of the potential initiation of the Fed's easing programme in the latter half of the year, most likely at the September 18 meeting.
The subdued US CPI figures aligned with Chief Jerome Powell's earlier statements in the week, where he dismissed the possibility of a rate hike and anticipated subdued inflation throughout the year.
Domestically, the Australian dollar ignored the additional advance in copper prices, contrasting with relatively stable iron ore prices. On the docket, the labour market showed mixed feelings after the Unemployment Rate ticked higher to 4.1% and Employment Change increased more than expected by 38.5K individuals in April.
Regarding monetary policy, the Reserve Bank of Australia (RBA) opted to keep its interest rate steady at 4.35% during its May 7 meeting, maintaining a neutral stance and signalling flexibility. The RBA's economic projections foresee elevated inflation rates until Q2 2025, driven by service price inflation, with an eventual return to the 2%–3% target range by late 2025, reaching the midpoint by 2026.
During the subsequent press briefing, Governor Michele Bullock adopted a balanced stance, suggesting potential rate adjustments but without a definitive commitment.
Currently, the swaps market largely discounts the likelihood of further rate hikes in the next six months, with expectations of a decline in the subsequent period.
Furthermore, both the RBA and the Federal Reserve are anticipated to implement easing measures later than many of their G10 counterparts.
Considering the Fed's commitment to monetary policy tightening and the potential for RBA easing later in the year, sustained upward movements in AUD/USD are anticipated to encounter limitations.
AUD/USD daily chart
AUD/USD short-term technical outlook
Extra gains may cause the AUD/USD to initially try the May high of 0.6714 (May 16) before the December 2023 top of 0.6871 and the July 2023 peak of 0.6894 (July 14), all ahead of the key 0.7000 yardstick.
Meanwhile, occasional bearish attempts could drag spot the interim 100-day and 55-day SMAs of 0.6567 and 0.6548, respectively, before the more significant 200-day SMA of 0.6522, all before dropping to the May low of 0.6465 and the 2024 bottom of 0.6362 (April 19).
Looking at the larger picture, further gains are possible as long as spot continues above the 200-day SMA.
Information on these pages contains forward-looking statements that involve risks and uncertainties. Markets and instruments profiled on this page are for informational purposes only and should not in any way come across as a recommendation to buy or sell in these assets. You should do your own thorough research before making any investment decisions. FXStreet does not in any way guarantee that this information is free from mistakes, errors, or material misstatements. It also does not guarantee that this information is of a timely nature. Investing in Open Markets involves a great deal of risk, including the loss of all or a portion of your investment, as well as emotional distress. All risks, losses and costs associated with investing, including total loss of principal, are your responsibility. The views and opinions expressed in this article are those of the authors and do not necessarily reflect the official policy or position of FXStreet nor its advertisers. The author will not be held responsible for information that is found at the end of links posted on this page.
If not otherwise explicitly mentioned in the body of the article, at the time of writing, the author has no position in any stock mentioned in this article and no business relationship with any company mentioned. The author has not received compensation for writing this article, other than from FXStreet.
FXStreet and the author do not provide personalized recommendations. The author makes no representations as to the accuracy, completeness, or suitability of this information. FXStreet and the author will not be liable for any errors, omissions or any losses, injuries or damages arising from this information and its display or use. Errors and omissions excepted.
The author and FXStreet are not registered investment advisors and nothing in this article is intended to be investment advice.
Recommended Content
Editors’ Picks
EUR/USD extends recovery beyond 1.0400 amid Wall Street's turnaround
EUR/USD extends its recovery beyond 1.0400, helped by the better performance of Wall Street and softer-than-anticipated United States PCE inflation. Profit-taking ahead of the winter holidays also takes its toll.
GBP/USD nears 1.2600 on renewed USD weakness
GBP/USD extends its rebound from multi-month lows and approaches 1.2600. The US Dollar stays on the back foot after softer-than-expected PCE inflation data, helping the pair edge higher. Nevertheless, GBP/USD remains on track to end the week in negative territory.
Gold rises above $2,620 as US yields edge lower
Gold extends its daily rebound and trades above $2,620 on Friday. The benchmark 10-year US Treasury bond yield declines toward 4.5% following the PCE inflation data for November, helping XAU/USD stretch higher in the American session.
Bitcoin crashes to $96,000, altcoins bleed: Top trades for sidelined buyers
Bitcoin (BTC) slipped under the $100,000 milestone and touched the $96,000 level briefly on Friday, a sharp decline that has also hit hard prices of other altcoins and particularly meme coins.
Bank of England stays on hold, but a dovish front is building
Bank of England rates were maintained at 4.75% today, in line with expectations. However, the 6-3 vote split sent a moderately dovish signal to markets, prompting some dovish repricing and a weaker pound. We remain more dovish than market pricing for 2025.
Best Forex Brokers with Low Spreads
VERIFIED Low spreads are crucial for reducing trading costs. Explore top Forex brokers offering competitive spreads and high leverage. Compare options for EUR/USD, GBP/USD, USD/JPY, and Gold.