The Australian Dollar (AUD) has appreciated against the US Dollar (USD) following the Reserve Bank of Australia’s (RBA) decision to maintain the Official Cash Rate (OCR) at 4.35%. RBA officials cited strong labor market conditions and persistent inflation as key factors in their decision, emphasizing their commitment to returning inflation to target levels.
RBA Governor Michele Bullock stated that recent data has not significantly altered the policy outlook, noting that a rate hike was not actively considered during the meeting. Meanwhile, the ANZ-Roy Morgan Consumer Confidence Index increased slightly to 84.9, although it remains below the critical 85.0 threshold for 86 weeks.
Market Insights: Fed Rate Cuts Pressure USD
The USD faces potential challenges as Federal Reserve officials signal the possibility of further rate cuts totaling 50 basis points in 2024. Minneapolis Fed President Neel Kashkari reiterated support for these cuts, which have contributed to a more cautious USD outlook. The CME FedWatch Tool indicates a 50% chance of a 75 basis point reduction by year-end.
In economic data, the S&P Global Composite PMI showed slower growth, with the Manufacturing PMI unexpectedly dropping to 47.0, indicating contraction, while the Services PMI expanded to 55.4.
Technical Analysis: AUD/USD Approaches Nine-Month High
The AUD/USD pair is trading near 0.6840, moving upward within an ascending channel pattern, suggesting a bullish trend. The 14-day Relative Strength Index (RSI) is above 50, reinforcing this bullish outlook.
The pair is currently testing a nine-month high at 0.6839, with a breakout above this level potentially leading to further gains toward the 0.6910 mark. Support is expected at the lower boundary of the ascending channel and the nine-day Exponential Moving Average (EMA) around 0.6788, with further support at the psychological level of 0.6700. A drop below this could see the pair revisit its six-week low at 0.6622.
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