The AUD/USD pair experienced a rebound, distancing itself from sub-0.6500 levels after an intraday dip on Wednesday. Despite the earlier setback, spot prices reached the 0.6525 region during the early European session, displaying a lack of follow-through or strong bullish conviction.
Optimistic remarks from China’s National Development and Reform Commission (NDRC) contributed to a minor lift in the Australian Dollar (AUD). The NDRC stated that China’s 2024 growth target aligns with economic potential, expressing confidence in a strong start for Q1 and predicting a consolidated and strengthened recovery. Further support came from People’s Bank of China (PBoC) Governor Pan Gongsheng, who emphasized the central bank‘s sufficient room for monetary policy adjustments, including potential cuts to the Reserve Requirement Ratio (RRR). These positive developments overshadowed less impressive domestic data, revealing a modest 0.2% growth in Australia’s economy for the December quarter.
In addition to Chinese factors, a modest weakness in the US Dollar (USD) played a crucial role in propelling the AUD/USD pair higher. Market sentiment has been pricing in a 70% likelihood of the Federal Reserve (Fed) implementing the first interest rate cut in June. The recent US ISM PMI data indicating a slowdown in the services sector growth in February kept USD bulls on the defensive, contributing to the intraday uptick in the AUD/USD pair. However, traders exhibited caution in initiating fresh USD bearish positions pending Federal Reserve Chair Jerome Powell’s congressional testimony, anticipated for cues on the future rate-cut trajectory.
Market participants will also monitor the release of the US ADP report on private-sector employment and JOLTS Job Openings data during the early North American session. These releases, coupled with broader risk sentiment, will influence the USD and present short-term trading opportunities for the AUD/USD pair ahead of Thursday’s Chinese trade balance data. Attention will then shift to the eagerly awaited US Nonfarm Payrolls (NFP) report on Friday. Despite this, current spot prices have snapped a two-day losing streak, with the AUD/USD pair susceptible to USD price dynamics in the interim.
