- AUD/USD drop influenced by a surprise PBoC rate hold decision amid thin liquidity conditions on the US market holiday.
- Mixed economic data throughout January could prevent the RBA from raising rates in the near term.
- The pair is at the mercy of Aussie’s economic data, along with US NY Empires State Index and Fed’s Waller speech.
The Aussie Dollar (AUD) dropped during the North American session by some 0.42% against the US Dollar (USD) due to sentiment deterioration and low volume conditions, as the financial markets in the United States (US) remained closed on Martin Luther King (MLK) holiday. The AUD/USD trades at 0.6655 after hitting a high of 0.6705.
AUD/USD driven by risk aversion at the beginning of the week
AUD/USD was hurt by risk appetite as well as the People’s Bank of China (PBoC) keeping rates unchanged at 2.50%, coughing traders off guard, even though China’s economy crawls to grow at the levels expected by China’s President Xi Jinping.
Meanwhile, economic conditions in Australia continued to be challenging, as most of its PMIs remained in contractionary territory despite a slight improvement. Further data was positive, with Retail Sales exceeding the forecast of 1.2%, coming at 2% on January 6, adding to inflationary pressures, which were dissipated by the latest report. On January 9, the Australian Bureau of Statistics (ABS) revealed that headline inflation hit 4.3%, diving for the third straight month, which could deter the Reserve Bank of Australia (RBA) from hiking rates.
Ahead of the week, Australia’s economic docket will feature Westpac Consumer Confidence alongside housing data release. On the US front, the calendar would feature the NY Empire State Manufacturing Index on Tuesday, along with the Federal Reserve Governor Christoper Waller's speech.
AUD/USD Price Analysis: Technical outlook
The daily chart portrays the pair as neutral to upward biased, but in the last week, it has been trading sideways, unable to gather direction. If buyers lift the AUD/USD past the first resistance seen at 0.6700, they will face the next ceiling at the January 12 high of 0.6727. Once hurdled, the next stop would be the January 5 high of 0.6747, ahead of 0.6800. on the flip side, downside risks remain at the January 5 low of 0.6640, followed by the 0.6600 threshold.
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 hovers above 1.0500 amid French political jitters
EUR/USD is trading modestly flat above 1.0500 in the early European morning on Wednesday. The pair gyrates in a familiar range amid a broadly stable US Dollar and French political uncertainty, as the government faces a no-confidence vote in a busy day ahead.
GBP/USD clings to gains below 1.2700 ahead of Bailey's speech
GBP/USD is consolidating gains below 1.2700 in early European trading on Wednesday. Traders refrain from placing fresh bets ahead of speeches from BoE Governor Bailey and Fed Chair Powell later in the day. US ADP Jobs and ISM Services PMI data are also awaited.
Gold awaits Fed Chair Powell’s speech for a fresh directional impetus
Gold price is holding onto minor bids early Wednesday, struggling to build on the previous bounce, anticipating a fresh batch of top-tier US economic data releases and Federal Reserve Chairman Jerome Powell’s speech.
Cryptomarket stabilizes after South Korea reverses martial law
Bitcoin hovers near $95,700 on Wednesday, signaling potential weakness as technical indicators suggest a decline, while Ethereum and Ripple stabilize near key levels, hinting at a possible rally following South Korea's reversal of martial law.
The fall of Barnier’s government would be bad news for the French economy
This French political stand-off is just one more negative for the euro. With the eurozone economy facing the threat of tariffs in 2025 and the region lacking any prospect of cohesive fiscal support, the potential fall of the French government merely adds to views that the ECB will have to do the heavy lifting in 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.