- AUD/USD draws support from a softer USD downtick, though it lacks bullish conviction.
- The Fed’s hawkish stance and a weaker risk tone lend support to the safe-haven buck.
- The RBA’s dovish shift and China’s economic woes also contribute to capping the pair.
- Traders look to the US PCE Price Index for short-term opportunities later this Friday.
The AUD/USD pair attracts some dip-buyers near the 0.6215 area on Friday and turns positive for the second successive day on Friday, though it lacks bullish conviction. Spot prices currently trade around the mid-0.6200s and remain close to the lowest level since October 2022 touched on Thursday.
A modest pullback in the US Treasury bond yields keeps a lid on the recent US Dollar (USD) rally to a two-year peak, which, in turn, is seen as a key factor offering some support to the AUD/USD pair. That said, the Federal Reserve's (Fed) hawkish signal that it would slow the pace of interest rate cuts in 2025 should act as a tailwind for the US bond yields and the USD. Apart from this, the prevalent risk-off mood could underpin the safe-haven buck and cap further gains for the risk-sensitive Aussie.
Investors remain concerned about persistent geopolitical risks stemming from the protracted Russia-Ukraine war and tensions in the Middle East. Apart from this, worries about US President-elect Donald Trump's proposed tariffs, along with the threat of a partial US government shutdown at the end of the day on Friday, take its toll on the global risk sentiment. Furthermore, China's economic woes and the Reserve Bank of Australia's (RBA) dovish shift should contribute to keeping a lid on the AUD/USD pair.
Hence, it will be prudent to wait for strong follow-through buying before confirming that spot prices have formed a near-term bottom and positioning for any meaningful recovery. Next on tap is the release of the US Personal Consumption Expenditure (PCE) Price Index later during the early North American session. The Fed's preferred inflation gauge will influence the USD price dynamics and produce short-term opportunities around the AUD/USD pair heading into the weekend.
Economic Indicator
Personal Consumption Expenditures - Price Index (YoY)
The Personal Consumption Expenditures (PCE), released by the US Bureau of Economic Analysis on a monthly basis, measures the changes in the prices of goods and services purchased by consumers in the United States (US). The YoY reading compares prices in the reference month to a year earlier. Price changes may cause consumers to switch from buying one good to another and the PCE Deflator can account for such substitutions. This makes it the preferred measure of inflation for the Federal Reserve. Generally, a high reading is bullish for the US Dollar (USD), while a low reading is bearish.
Read more.Next release: Fri Dec 20, 2024 13:30
Frequency: Monthly
Consensus: 2.5%
Previous: 2.3%
Source: US Bureau of Economic Analysis
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 recovers above 1.0400 after US inflation data
EUR/USD gathers recovery momentum and trades above 1.0400 on Friday. The data from the US showed that the core PCE Price Index rose 0.1% on a monthly basis. This reading came in below the market expectation of 0.3% and weighed on the USD.
GBP/USD climbs to 1.2550 area on renewed USD weakness
GBP/USD extends its rebound from multi-month lows and trades near 1.2550. The US Dollar struggles to find demand following the softer-than-forecast PCE inflation data, helping the pair edge higher heading into the weekend.
Gold price holds above $2,600 as US yields edge lower
Gold stays in positive territory above $2,600 on Friday. The benchmark 10-year US Treasury bond yield declines toward 4.5% following the PCE inflation data for November, helping XAU/USD hold its ground 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.