The Australian dollar is steady in the Monday session. In European trade, AUD/USD is trading at 0.7722, up 0.14%.
The US dollar showed some broad strength on Friday, and AUD/USD fell 0.70% and briefly fell below the 0.77 level. The greenback was supported by inflows from international investors who snapped up US Treasuries in month-end rebalancing flows.
Strong US numbers on Friday also gave the US dollar a boost. The Core PCE Price Index, which is considered the Federal Reserve’s preferred inflation gauge, rose to 0.4% in March, up from 0.1% beforehand. This is another indication of inflationary pressures, as the US economy continues to sprint at a fast pace. The Fed has stated more than once that any spike in inflation will be temporary, but it’s not at all clear that the market has bought into this stance. If inflation numbers continue to rise in the coming months, the Fed may have to acknowledge that higher inflation levels are not a passing event.
On Friday, Fed Governor Robert Kaplan, who is not a voting member, said straight out the Fed needs to be talking about tapering its asset-purchase program. The Fed has insisted that it needs to keep its foot to the pedal as the economy continues to recover, but there’s a good chance that other Fed members agree with Kaplan. The US economy has been reeling off impressive numbers, and the April nonfarm payroll report is expected in at 975 thousand. A print above the one million mark is certainly achievable and would provide ammunition to the view that the Fed should review its current policy.
RBA expected to hold the course
The RBA is facing a similar economic picture to that of the Fed – a rapidly improving economy and strong growth. Like the Fed, the RBA has implemented a highly accommodative policy in order to support the economy’s recovery from the Covid pandemic.
The central bank holds its policy meeting on Tuesday (4:30 GMT), and the bank is expected to maintain interest rates at 0.10% and its QE programme of A$100 billion. Unless there is a surprise announcement, I would expect the RBA meeting to be a non-event for the Australian dollar.
AUD/USD technical
-
On the upside, 0.7787 is the next resistance line. Above, there is resistance at 0.7864.
-
On the downside, there are support levels at 0.7665 and 0.7620.
This article is for general information purposes only. It is not investment advice or a solution to buy or sell securities.
Opinions are the authors — not necessarily OANDA’s, its officers or directors. OANDA’s Terms of Use and Privacy Policy apply. Leveraged trading is high risk and not suitable for all. You could lose all of your deposited funds.
Recommended Content
Editors’ Picks
EUR/USD stays near 1.0800 after upbeat US data
EUR/USD stays under modest bearish pressure and trades near 1.0800 in the American session on Thursday. The data from the US showed that the real GDP growth for the fourth quarter got revised higher to 3.4% from 3.2%, supporting the USD and weighing on the pair.
GBP/USD stays in daily range above 1.2600
GBP/USD fluctuates in a narrow channel above 1.2600 on Thursday. The better-than-expected Initial Jobless Claims data from the US and the upward revision to the Q4 GDP growth helps the USD stay resilient against its rivals and limits the pair's upside.
Gold pulls away from daily highs, holds above $2,200
Gold retreats from daily highs but holds comfortably above $2,200 in the American session on Thursday. The benchmark 10-year US Treasury bond yield stays above 4.2% after upbeat US data and makes it difficult for XAU/USD to preserve its bullish momentum.
XRP price falls to $0.60 support as Ripple ruling doesn’t help Coinbase lawsuit against SEC
XRP programmatic sales ruling by Judge Torres was completely rejected by another US Court that ruled in favor of the SEC in a lawsuit against Coinbase.
Portfolio rebalancing and reflation trades emerge into Q2
Yesterday’s price action pointed at a possible end-of-quarter portfolio rebalancing as the session saw the laggards of the quarter like Apple and Tesla gain, and the stars like Microsoft and Nvidia retreat.