The AUD/USD currency pair fell by 0.20% to 0.6710 during Friday’s trading session. This decline came as the Australian Dollar weakened despite the US Dollar also losing ground. Comments from a well-connected source suggested a heightened likelihood of a 50-basis-point rate cut by the Federal Reserve (Fed) at its upcoming meeting, which put pressure on the Greenback. However, the Australian Dollar’s decline was tempered by the Reserve Bank of Australia’s (RBA) continued hawkish stance.
The economic outlook for Australia remains uncertain. The RBA’s cautious approach, driven by persistent inflationary pressures, suggests that any interest rate cuts will be modest. Financial markets now expect a smaller 0.25% rate cut in 2024, a shift from previous expectations of more substantial easing. This cautious position underscores the RBA’s balancing act between controlling inflation and supporting economic growth.
Daily Digest Market Movers:
US Treasury yields dropped significantly across the curve following a Wall Street Journal report indicating a possible 50 basis point cut at the Federal Open Market Committee (FOMC) meeting next week.
The CME FedWatch Tool indicates that markets are fully pricing in a 25 basis point rate cut, with a 41% chance of a 50 basis point cut. Nick Timiraos, a Wall Street Journal reporter with close ties to the Fed, suggested that the decision could be closely contested.
In contrast, RBA Governor Michele Bullock reiterated a hawkish view, asserting last week that inflation remains too high to consider rate cuts at this time.
AUD/USD Technical Outlook:
The AUD/USD pair’s decline of 0.20% on Friday ended a two-day winning streak. The Relative Strength Index (RSI) has fallen to 51, indicating a reduction in buying pressure. The Moving Average Convergence Divergence (MACD) histogram is flat and red, suggesting steady selling pressure. The overall outlook for the pair is mixed, with expectations of sideways trading in the near term.
Support levels for the pair are identified at 0.6650, 0.6600, and 0.6550, while resistance levels are located at 0.6735 (20-day Simple Moving Average), 0.6750, and 0.6800.
Related Topics:
