AUD/USD Price Forecast: Bears await Fed Chair Powell’s speech after the post-GDP slump
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UPGRADE- AUD/USD comes under heavy selling as weaker Australian GDP fuels early RBA rate cut bets.
- China’s economic woes and US-China trade war fears further exert pressure on the Aussie.
- The USD bulls remain on the sidelines ahead of Powell’s speech, lending support to the pair.
The AUD/USD pair tumbled to its lowest level since August following the release of softer Australian Gross Domestic Product (GDP) print on Wednesday, which lifted bets for an early interest rate cut by the Reserve Bank of Australia (RBA). In fact, the Australian Bureau of Statistics (ABS) reported that the economy expanded by 0.3% in the third quarter and by 0.8% on a yearly basis, missing estimates for a reading of 0.4% and 1.1%, respectively. Given that the headline inflation in Australia has fallen to the central bank's 2%-3% target range, the slowest annual growth rate since the pandemic puts pressure on the RBA to respond with lower interest rates. In fact, the markets now seem to have fully priced in a rate cut in April 2025 and see a 35 basis point easing for May.
Adding to this, a private survey showed that business activity in China's services sector expanded at a slower pace in November amid a prolonged property downturn and weakening global demand. The Caixin/S&P Global China Services PMI unexpectedly fell to 51.5 from 52.0 in October. This comes after the US announced a new set of export controls to curb China's technological advancements, restricting the sale of crucial semiconductor-manufacturing equipment and high-bandwidth computer memory to the country. Furthermore, investors remain concerned that US President-elect Donald Trump's impending trade tariffs could trigger the second wave of a US-China trade war. This exerted additional pressure on the China-proxy Australian Dollar (AUD) and the AUD/USD pair.
Meanwhile, the US Job Openings and Labor Turnover Survey (JOLTS) published by the US Bureau of Labor Statistics (BLS) on Tuesday showed that the number of job openings increased solidly from 7.37 million to 7.74 million in October. The data eased fears of a significant slowdown in the US labor market and might force the Federal Reserve (Fed) to take a cautious stance on cutting rates amid expectations that Trump's expansionary policies will boost inflation. This triggers a modest uptick in the US Treasury bond yields and acts as a tailwind for the US Dollar (USD). Traders, however, seem reluctant to place aggressive USD bullish bets ahead of Fed Chair Jerome Powell's speech, which assists the AUD/USD pair to find decent support and bounce off the 0.6400 round-figure mark.
In the meantime, investors on Wednesday will confront the release of the US ADP report on private-sector employment and the US ISM Services PMI. The focus, however, will remain glued to the official US monthly employment details on Friday. The popularly known Nonfarm Payrolls (NFP) report will be looked for cues about the interest rate outlook in the US. This, in turn, will play a key role in influencing the near-term USD price dynamics and provide some meaningful impetus to the AUD/USD pair. Nevertheless, the aforementioned fundamental backdrop suggests that the path of least resistance for spot prices is to the downside and supports prospects for deeper losses.
Technical Outlook
From a technical perspective, weakness below the intraday swing low, around the 0.6400 mark, will confirm a breakdown through a two-week-old trading range and pave the way for deeper losses. Moreover, oscillators on the daily chart are holding deep in negative territory and are still away from being in the oversold zone. This, in turn, suggests that the AUD/USD pair could aim to challenge the year-to-date low, around the 0.6350-0.6345 region touched in August. Some follow-through selling will be seen as a fresh trigger for bearish traders and drag spot prices to the 0.6300 mark en route to the 2023 swing low, around the 0.6270-0.6265 region.
On the flip side, any recovery beyond the 0.6450-0.6460 immediate hurdle is more likely to attract fresh sellers near the 0.6500 psychological mark and remain capped near the 0.6535-0.6540 supply zone. A sustained strength beyond, however, could trigger a short-covering rally and lift the AUD/USD pair to the 0.6600 round figure en route to the 0.6625-0.6630 confluence hurdle. The latter comprises the 200- and the 50-day Simple Moving Averages (SMAs), which should act as a key pivotal point and if cleared decisively, might shift the bias in favor of bullish traders.
AUD/USD 4-hour chart
- AUD/USD comes under heavy selling as weaker Australian GDP fuels early RBA rate cut bets.
- China’s economic woes and US-China trade war fears further exert pressure on the Aussie.
- The USD bulls remain on the sidelines ahead of Powell’s speech, lending support to the pair.
The AUD/USD pair tumbled to its lowest level since August following the release of softer Australian Gross Domestic Product (GDP) print on Wednesday, which lifted bets for an early interest rate cut by the Reserve Bank of Australia (RBA). In fact, the Australian Bureau of Statistics (ABS) reported that the economy expanded by 0.3% in the third quarter and by 0.8% on a yearly basis, missing estimates for a reading of 0.4% and 1.1%, respectively. Given that the headline inflation in Australia has fallen to the central bank's 2%-3% target range, the slowest annual growth rate since the pandemic puts pressure on the RBA to respond with lower interest rates. In fact, the markets now seem to have fully priced in a rate cut in April 2025 and see a 35 basis point easing for May.
Adding to this, a private survey showed that business activity in China's services sector expanded at a slower pace in November amid a prolonged property downturn and weakening global demand. The Caixin/S&P Global China Services PMI unexpectedly fell to 51.5 from 52.0 in October. This comes after the US announced a new set of export controls to curb China's technological advancements, restricting the sale of crucial semiconductor-manufacturing equipment and high-bandwidth computer memory to the country. Furthermore, investors remain concerned that US President-elect Donald Trump's impending trade tariffs could trigger the second wave of a US-China trade war. This exerted additional pressure on the China-proxy Australian Dollar (AUD) and the AUD/USD pair.
Meanwhile, the US Job Openings and Labor Turnover Survey (JOLTS) published by the US Bureau of Labor Statistics (BLS) on Tuesday showed that the number of job openings increased solidly from 7.37 million to 7.74 million in October. The data eased fears of a significant slowdown in the US labor market and might force the Federal Reserve (Fed) to take a cautious stance on cutting rates amid expectations that Trump's expansionary policies will boost inflation. This triggers a modest uptick in the US Treasury bond yields and acts as a tailwind for the US Dollar (USD). Traders, however, seem reluctant to place aggressive USD bullish bets ahead of Fed Chair Jerome Powell's speech, which assists the AUD/USD pair to find decent support and bounce off the 0.6400 round-figure mark.
In the meantime, investors on Wednesday will confront the release of the US ADP report on private-sector employment and the US ISM Services PMI. The focus, however, will remain glued to the official US monthly employment details on Friday. The popularly known Nonfarm Payrolls (NFP) report will be looked for cues about the interest rate outlook in the US. This, in turn, will play a key role in influencing the near-term USD price dynamics and provide some meaningful impetus to the AUD/USD pair. Nevertheless, the aforementioned fundamental backdrop suggests that the path of least resistance for spot prices is to the downside and supports prospects for deeper losses.
Technical Outlook
From a technical perspective, weakness below the intraday swing low, around the 0.6400 mark, will confirm a breakdown through a two-week-old trading range and pave the way for deeper losses. Moreover, oscillators on the daily chart are holding deep in negative territory and are still away from being in the oversold zone. This, in turn, suggests that the AUD/USD pair could aim to challenge the year-to-date low, around the 0.6350-0.6345 region touched in August. Some follow-through selling will be seen as a fresh trigger for bearish traders and drag spot prices to the 0.6300 mark en route to the 2023 swing low, around the 0.6270-0.6265 region.
On the flip side, any recovery beyond the 0.6450-0.6460 immediate hurdle is more likely to attract fresh sellers near the 0.6500 psychological mark and remain capped near the 0.6535-0.6540 supply zone. A sustained strength beyond, however, could trigger a short-covering rally and lift the AUD/USD pair to the 0.6600 round figure en route to the 0.6625-0.6630 confluence hurdle. The latter comprises the 200- and the 50-day Simple Moving Averages (SMAs), which should act as a key pivotal point and if cleared decisively, might shift the bias in favor of bullish traders.
AUD/USD 4-hour chart
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