The Australian Dollar (AUD) experienced a second consecutive decline on Friday, largely influenced by a strengthening US Dollar (USD) following mixed S&P preliminary Purchasing Managers Index (PMI) data and robust weekly Jobless Claims from the United States (US).
The decline in the ASX 200 Index added to the downward pressure on the Australian Dollar. Despite a positive performance on Wall Street, where all three major benchmarks set record highs, the Australian equity market suffered losses, particularly in energy and consumer stocks.
Despite lower US Treasury yields, the US Dollar Index (DXY) continued to gain ground. Challenges to the US Dollar arose from the Federal Reserve’s (Fed) reaffirmation of expectations for three interest rate cuts in 2024. The consensus suggests the start of an easing cycle in June, with the timing of the next cut contingent upon incoming data.
In terms of market movements, the Australian Dollar fell to near 0.6540, with the next key support level at the 61.8% Fibonacci retracement. However, amidst this decline, there were notable developments in Australia’s economic indicators:
Australian Employment Change for February surged to 116.5K, surpassing expectations.
Australia’s Unemployment Rate dropped to 3.7%, lower than anticipated.
The preliminary Judo Bank Services PMI showed improvement, rising to 53.5.
People’s Bank of China (PBoC) maintained its interest rate unchanged at 3.45%.
In the US, the Federal Open Market Committee (FOMC) held interest rates at 5.5%, but remarks from US Federal Reserve (Fed) Chair Jerome Powell in the post-meeting press conference indicated a dovish stance, further impacting the Greenback.
S&P Global Services PMI showed a slight decrease in March, while Manufacturing PMI rose and Initial Jobless Claims for the week ending on March 15 came in below expectations.
Technical analysis of the Australian Dollar indicates a near-term support level at 0.6528, with resistance at 0.6550. A breakthrough above the latter could support upward momentum, while a break below the former may see further downside towards 0.6500 levels.
