AUDUSD Forecast and News
AUD/USD creeps lower to test 0.6550 ahead of RBA’s decision
AUD/USD is grinding lower to test the 0.6550 level in Asian trading on Tuesday. The Aussie Dollar stays on the defensive against the US Dollar as markets prepare for the Reserve Bank of Australia's extended pause but the Bank's rate outlook will hold the key.
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Technical Overview
If sellers push stronger, AUD/USD may breach the important 200-day SMA in the 0.6560 region, while a loss of the region could cause the pair to fall down to the March low of 0.6477 (March 5), before reaching the 2024 low of 0.6442 (February 13). Breaking below this level might lead to a visit to the 2023 low of 0.6270 (October 26), followed by the round level of 0.6200 and the 2022 low of 0.6169 (October 13).
On the upside, a breakout of the March peak of 0.6667 (March 8) might target the December 2023 high of 0.6871 (December 28), followed by monthly tops of 0.6894 (July 14) and 0.6899 (June 16), all before the important 0.7000 barrier.
On the 4-hour chart, the downward momentum appears to have picked up pace recently. Against that, further losses may cause the pair to retest the 200-SMA at 0.6542, seconded by 06477, and finally 0.6442. On the other hand, the initial resistance is at the 55-SMA at 0.6590 followed by 0.6667 and 0.6728. Furthermore, the MACD recedes to the negative zone, and the RSI drops to the 35 area.
Fundamental Overview
The intense buying pressure in the US Dollar (USD) spurred AUD/USD to accelerate its downward movement, extending the break below the critical 0.6600 support level and flirting with the key 200-day SMA around 0.6560/50 band on Monday.
Simultaneously, the Greenback's recovery was once again bolstered by further upside in US yields across various timeframes as well as diminishing bets for an interest rate cut by the Federal Reserve (Fed) in June.
Adding to the negative sentiment surrounding the Aussie dollar was the persistent downward pressure on iron ore prices, fueled by escalating concerns regarding China and its construction and housing sectors. Iron ore prices retreated below the $110.00 mark per tonne, a level not seen since late August 2023.
The economic dynamics in China are expected to have further repercussions for the AUD. While potential stimulus measures might offer short-term relief, sustained improvements in economic indicators are crucial for bolstering the Australian currency and potentially initiating a significant upward trend in AUD/USD. Still around China, the Aussie dollar practically ignored the upbeat results from the Chinese docket published early on Monday, after Fixed Asset Investment, Retail Sales and Industrial Production all exceeded expectations. On the not-so-bright side, the Unemployment Rate ticked higher to 5.3% (from 5.2%).
In light of the upcoming Reserve Bank of Australia (RBA) meeting, the expected cautious approach of the central bank could act as an important contention zone for the AUD, as investors see the bank’s forward guidance to remain unchanged as well as its mention that further rate hikes should not be ruled out. It is worth mentioning that the RBA remains one of the last G10 central banks to consider interest rate adjustments.
Looking at the bigger picture and given the discrepancy in the timing of monetary policy adjustments between the RBA and the Fed, the Aussie dollar may gain momentum later in the year, potentially driving further advances in AUD/USD. Once surpassing the December 2023 peak of 0.6871, the pair could target the significant milestone of 0.7000 in the near future.
SPECIAL WEEKLY FORECAST
Interested in weekly AUDUSD forecasts? Our experts make weekly updates forecasting the next possible moves of the aussie-dollar pair. Here you can find the most recent forecast by our market experts:
AUD/USD: Interim top confirmed, 0.7000 at risk Premium
The AUD/USD pair kept falling in the last few days, reaching a fresh multi-week low of 0.7263 on Friday, to close the trading week a handful of pips above it.
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Editors' picks
EUR/USD remains under pressure above the mid-1.0800s, Fed rate decision eyed
The EUR/USD pair edges lower to multi-day lows around 1.0870 on the firmer US Dollar during the early Asian session on Tuesday. The Federal Reserve monetary policy meeting on Wednesday will be in the spotlight, with no change in rates expected.
GBP/USD attracts some sellers below the mid-1.2700s, all eyes on Fed, BoE rate decision
The GBP/USD pair remains under some selling pressure during the early Asian session on Tuesday. The uptick in the US Dollar above 103.50 and higher US yields provide some support to the major pair. Markets turn cautious ahead of the central bank meetings, including the Federal Reserve and Bank of England interest rate decisions.
USD/JPY advances toward 149.50 ahead of crucial BoJ policy decision
USD/JPY is rising toward 149.50 in the Asian session on Tuesday, picking up fresh bids. Traders keenly await the highly-anticipated Bank of Japan policy decision. The BoJ's outlook on the negative interest rate policy and the Yield Curve Control (YCC) will play a key role in influencing the Japanese Yen.
Gold stays afloat despite high US yields as traders focus on Fed policy
Gold sees a modest increase, as investors watch this week's central bank meetings. Focus remains on the Federal Reserve, where a hawkish stance could potentially impact XAU/USD price while bolstering the US Dollar.
WTI climbs further beyond $81.00/barrel mark, hits fresh YTD peak amid supply concerns
WTI prolongs its upward trajectory on Monday and climbs to a fresh YTD peak. Concerns about tightening global supply continue to benefit the commodity. Hawkish Fed expectations might keep a lid on any further appreciating move.
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AUDUSD YEARLY FORECAST
How could AUDUSD move this year? Our experts make an AUDUSD update forecasting the possible moves of the aussie-dollar pair during the whole year. Don't miss our 2024 AUDUSD forecast!
AUDUSD FORECAST 2024
The Australian Dollar (AUD) started 2023 on a high note, though slumped closer to its post-pandemic low against the USD during the latter part of the year. The currency clawed back some of its steep declines during the final two months of 2023, and the outlook seems sunnier in the wake of the prevalent bearish sentiment surrounding the Greenback. Read more details about the forecast.
MOST INFLUENTIAL POLITICAL EVENTS IN 2024 FOR AUDUSD
Will the Fed will achieve a soft landing? The current market pricing for a more aggressive policy easing by the central bank next year might have already set the stage for a disappointment and favours the USD bulls. This should allow the USD to resume the prior uptrend witnessed since July 2023 and keep a lid on a runaway rally for the AUD/USD pair.
The upcoming US Presidential election could also play a key role in influencing the USD price dynamics and driving the aussie.
About AUDUSD
AUDUSD, The 'Aussie'
The AUDUSD pair, also called the “Aussie”, tells the trader how many US dollars (the quote currency) are needed to purchase one Australian dollar (the base currency). This currency pair is also known as the "Aussie". Together with the New Zealand Dollar and the Canadian Dollar, the AUD is a commodity currency, that is a currency whose country's exports are largely comprised of raw materials (precious metals, oil, agriculture, etc.).
The interest rates set by the Reserve Bank of Australia (RBA) have been among the highest of industrialized countries and the relatively high liquidity of the AUD has made it an attractive tool for carry traders looking for a currency with the highest yields. These factors made the AUD very popular among currency traders.
AUDUSD CORRELATIONS
Australia is a big exporter to China and its economy and currency reflect any change in the situation in that country. The prevailing view is that the Australian Dollar offers diversification benefits in a portfolio containing the major world currencies because of its greater exposure to Asian economies.
This correlation with the Shanghai stock exchange is to be added to the correlation it has with gold. The pair AUDUSD often rises and falls along with the price of gold. In the financial world, gold is viewed as a safe haven against inflation and it is one of the most traded commodities.
ORGANIZATIONS, PEOPLE AND ECONOMIC DATA THAT INFLUENCE AUDUSD
The AUDUSD news can be seriously affected by the decisions taken by these organizations and people:
- Reserve Bank of Australia (RBA) that issues statements and decides on the interest rates of the country. Its president is Michele Bullock.
- Australian Government and its Department of Finance that implement policies that affect the economy of the country.
- The US Government: events as administration statements, new laws and regulations or fiscal policy can increase or decrease the value of the US Dollar and the currencies traded against it, in this case, the Australian Dollar.
- Fed, the Federal Reserve of the United States whose president is Jerome Powell. The Fed controls the monetary policy, through active duties such as managing interest rates, setting the reserve requirement, and acting as a lender of last resort to the banking sector during times of bank insolvency or financial crisis.
In terms of economic data, as for most currencies, the AUDUSD traders have to keep an eye on:
- GDP (Gross Domestic Product), the total market value of all final goods and services produced in a country. It is a gross measure of market activity because it indicates the pace at which a country's economy is growing or decreasing. Generally speaking, a high reading or a better than expected number is seen as positive for the AUD, while a low reading is negative.
- Inflation measured by key indicators as the CPI (Core Price Index) and the PPI (Production Price Index), which reflect changes in purchasing trends.
- Current Trade Balance, a balance between exports and imports of total goods and services. A positive value shows trade surplus, while a negative value shows trade deficit. If a steady demand in exchange for AUD exports is seen, that would turn into a positive growth in the trade balance, and that should be positive for the AUD.
Michele Bullock
Michele Bullock is an Australian economist who is currently governor of the Reserve Bank of Australia. She commenced as governor on 18 September 2023, and is the first woman to hold the role. She is Chair of the Reserve Bank Board, Payments System Board and Council of Financial Regulators. Prior to her current role, Ms Bullock was the Deputy Governor of the Reserve Bank of Australia.
Michele Bullock RBA's Profile and Wikipedia
Jerome Powell
Jerome Powell took office as chairman of the Board of Governors of the Federal Reserve System in February 2018, for a four-year term ending in February 2022. His term as a member of the Board of Governors will expire January 31, 2028. Born in Washington D.C., he received a bachelor’s degree in politics from Princeton University in 1975 and earned a law degree from Georgetown University in 1979. Powell served as an assistant secretary and as undersecretary of the Treasury under President George H.W. Bush. He also worked as a lawyer and investment banker in New York City. From 1997 through 2005, Powell was a partner at The Carlyle Group.
Jerome Powell Fed's Profile and Wikipedia
RBA NEWS & ANALYSIS
FED NEWS & ANALYSIS
ASSETS THAT INFLUENCE AUD/USD THE MOST
- Currencies: NZD and JPY (New Zealand and Japan are important regional partners of Australia). Other important group of influent pairs includes: EUR/USD, GBP/USD, USD/JPY, USD/CHF, NZD/USD and USD/CAD.
- Commodities: The most important is Gold, as already explained above, but also Iron Ore and Natural Gas.
- Bonds: GACGB10 (Australian Government Bonds Generic Yield 10 Year), GNZGB10 (New Zealand Government Bond 10 Year) and T-NOTE 10Y (10 year US Treasury note).
- Indices: S&P/ASX 200 (stocks of the Australian Securities Exchange), S&P/TSX Global Gold Index (includes producers of gold and related products at the Toronto Stock Exchange).