- AUD/USD extends pullback from six-week top amid cautious optimism.
- Traders brace for RBA’s second rate hike of 2022, worth 0.25%, amid firmer Aussie jobs report, GDP data.
- China-linked headlines, data join increasing hawkish Fed bets to challenge traders.
- Off in New Zealand, Switzerland and Germany limit the market’s performance amid a light calendar.
AUD/USD holds lower ground near 0.7200, down for the second consecutive day after reversing from a six-week high, as market sentiment dwindles ahead of the key Reserve Bank of Australia (RBA) monetary policy verdict. Also challenging the Aussie pair buyers is the cautious mood ahead of this week’s US Consumer Price Index (CPI) for May.
A partial holiday in Australia joins the gradually improving Caixin Services PMI data for May from China to restrict immediate AUD/USD downside. That said, China’s Caixin Services PMI for May drops below 47.3 forecasts to 41.4, versus 36.2 prior. In doing so, the private services activity gauge marked a lesser reading for the fifth time while staying below the 50.00 neutral level, suggesting a contraction in activities.
Earlier in the day, Australia’s TD Securities Inflation for May, up from -0.1% to 1.1% MoM, tried to defend buyers but failed amid the market’s indecision ahead of the key US CPI and the RBA interest rate decision.
It’s worth observing that the recent positive Aussie data underpin expectations of a 0.25% rate hike for tomorrow, as well as clues for more such actions. Hence, any disappointment won’t be taken lightly as the odds favoring the Fed’s 0.50% rate hike in September recently jumped to 75% versus 35% a week ago.
Elsewhere, China’s reduction in covid-led activity restrictions and the US signals to please China will ease the Trump-era tariffs could help the AUD/USD to stay afloat, despite failing to post major gains.
To sum up, AUD/USD bears remain hopeful ahead of tomorrow’s RBA verdict.
Technical analysis
A pullback from the 200-DMA surrounding 0.7260 joins a clear downside break of a three-week-old ascending support line, now resistance around 0.7240, to favor AUD/USD bears targeting the 20-DMA support surrounding 0.7080.
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
USD/JPY remains below 158.00 after Japanese data
Soft US Dollar demand helps the Japanese Yen to trim part of its recent losses, with USD/JPY changing hands around 157.70. Higher than anticipated Tokyo inflation passed unnoticed.
AUD/USD weakens to near 0.6200 amid thin trading
The AUD/USD pair remains on the defensive around 0.6215 during the early Asian session on Friday. The incoming Donald Trump administration is expected to boost growth and lift inflation, supporting the US Dollar (USD). The markets are likely to be quiet ahead of next week’s New Year holiday.
Gold depreciates amid light trading, downside seems limited due to safe-haven demand
Gold edges lower amid thin trading following the Christmas holiday, trading near $2,630 during the Asian session on Friday. However, the safe-haven asset could find upward support as markets anticipate signals regarding the United States economy under the incoming Trump administration and the Fed’s interest rate outlook for 2025.
Floki DAO floats liquidity provisioning for a Floki ETP in Europe
Floki DAO — the organization that manages the memecoin Floki — has proposed allocating a portion of its treasury to an asset manager in a bid to launch an exchange-traded product (ETP) in Europe, allowing institutional investors to gain exposure to the memecoin.
2025 outlook: What is next for developed economies and currencies?
As the door closes in 2024, and while the year feels like it has passed in the blink of an eye, a lot has happened. If I had to summarise it all in four words, it would be: ‘a year of surprises’.
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.