The Australian Dollar (AUD) maintains its recent gains despite a muted Westpac Consumer Confidence report released on Tuesday. The decline in the US Dollar (USD) has lent support to the AUD/USD pair, underpinned by an uptick in risk appetite.
Market observers note that the Australian Dollar is buoyed by a stronger domestic equity market, with the ASX 200 Index poised for gains as investor focus remains on the Reserve Bank of Australia‘s (RBA) monetary policy decisions. Doubts are emerging among investors regarding the necessity for the RBA to implement interest rate cuts in 2024, particularly following encouraging US economic data that has bolstered expectations of a prolonged higher interest rate stance by the Federal Reserve (Fed).
Meanwhile, the US Dollar Index (DXY) faces hurdles as the Federal Reserve carefully assesses incoming economic indicators, leading to market fluctuations. Traders are eagerly awaiting the release of the US Consumer Price Index data scheduled for Wednesday, along with Australian Consumer Inflation Expectations and Chinese consumer prices slated for Thursday.
Key Market Insights:
Australia’s Westpac Consumer Confidence declined by 2.4% in April, compared to the previous fall of 1.8%.
Australian Trade Surplus (MoM) narrowed to 7,280 million in March, falling short of expectations at 10,400 million and February’s reading of 10,058 million.
Federal Reserve Bank of Minneapolis President Neel Kashkari emphasized the central bank‘s commitment to combating inflation, despite the current inflation rate hovering around 3%.
The likelihood of a 25-basis point rate cut by the Fed in June has reduced to 51.1%, according to the CME FedWatch Tool.
US headline CPI is expected to accelerate in March, while the core measure is anticipated to moderate.
US Nonfarm Payrolls (NFP) reported a significant increase of 303,000 jobs in March, surpassing expectations.
US Average Hourly Earnings rose by 0.3% month-over-month in March, meeting expectations.
Technical Analysis:
The Australian Dollar trades around 0.6610 on Tuesday, hovering above the psychological support of 0.6600. Analysts suggest a potential upward movement, supported by recent tests of the range around 0.6620 and 0.6630 throughout March. Additionally, the AUD/USD pair has surpassed the nine-day Exponential Moving Average (EMA) and found support above it. Key resistance levels are observed around 0.6650 and March’s high of 0.6667, while immediate support is identified at 0.6600, followed by the nine-day EMA at 0.6570 and a major support level of 0.6550.
