The Australian Dollar (AUD) encountered downward pressure despite robust employment figures released on Thursday. Australia’s Employment Change for May exceeded expectations with an increase of 39.7K employed individuals, surpassing both the anticipated 30.0K rise and the previous month’s 38.5K increase. Concurrently, the Unemployment Rate improved to 4.0%, below April’s 4.1% and in line with forecasts.
However, the AUD struggled against the US Dollar (USD), which rebounded following a hawkish stance from the US Federal Reserve (Fed). The Fed opted to maintain its benchmark lending rate unchanged within a range of 5.25%–5.50% at its June meeting, consistent with market expectations. Fed Chair Jerome Powell highlighted the intended impact of the Fed’s monetary policy on inflation, with policymakers revising their forecast to anticipate only one rate cut this year, down from three previously projected in March.
Investor focus now turns to upcoming US economic indicators, specifically the weekly Initial Jobless Claims and Producer Prices Index (PPI), which are expected to provide further insights into the economic landscape in the United States.
Additionally, the Australian Dollar contended with domestic economic indicators, including a downturn in the NAB Business Confidence index to -3 index points in May, marking its lowest level in six months. Business Conditions also dipped slightly below the long-term average to 6 index points. Amid these indicators, comments from Australian Treasurer Jim Chalmers underscored caution regarding China’s economic outlook, despite the visit of China’s Premier Li Qiang to Australia being seen as a significant opportunity.
From a technical perspective, the AUD/USD pair hovers around 0.6660, exhibiting a neutral bias as it consolidates within a rectangle formation on the daily chart. The 14-day Relative Strength Index (RSI) suggests a lack of clear directional momentum, positioned just below the 50 level. Immediate support is noted near the 50-day Exponential Moving Average (EMA) at 0.6604, with further support around 0.6585 at the lower boundary of the consolidation pattern. On the upside, resistance levels are identified near the upper boundary of the rectangle formation at 0.6700 and May’s high of 0.6714.
The ongoing interplay of economic data and central bank actions continues to shape the AUD/USD pair’s trajectory, with market participants monitoring developments closely for potential shifts in sentiment and trading dynamics.
This comprehensive analysis encapsulates the current factors influencing the Australian Dollar amidst global economic events and domestic economic indicators, providing clarity on its recent performance and future potential.
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