AUD/USD approaches 0.6500 despite US Dollar remains broadly upbeat
- AUD/USD advances toward 0.6500 as the RBA remains open for further policy tightening.
- Investors see the Fed reducing interest rates in June.
- Market participants await fresh guidance from the Australian Employment and the US Retail Sales data.
The AUD/USD pair marches toward the psychological resistance of 0.6500 even though the broader outlook for the US Dollar is bullish. The Aussie asset is up more than 0.4% in Wednesday’s early New York session as Reserve Bank of Australia (RBA) Governor Michele Bullock cautioned that the central bank remains receptive to further rate hikes.
While discussing the timing of rate cuts, RBA Bullock stated that the central bank might consider initiating rate cuts even before inflation decelerates to 2.5%.
Going forward, the Australian Dollar will be guided by the Employment data for January, which will be published on Thursday. According to the expectations, 30K workers were recruited against 65.1K lay-offs in December. The Unemployment Rate is seen rising to 4% from 3.9%. An upbeat Employment data would allow RBA policymakers to hold the Official Cast Rate (OCR) at 4.35% for longer.
Meanwhile, the US Dollar Index (DXY) is struck near a three-month high of 105.00. The USD Index is expected to witness more upside as stubborn United States inflation data has shifted expectations for rate cuts by the Federal Reserve (Fed) to the June monetary policy meeting. The Fed is expected to keep interest rates unchanged in the range of 5.25-5.50% until it gets evidence that inflation will comfortably return to the 2% target.
For further guidance, market participants will focus on the monthly US Retail Sales data for January, which will be published on Thursday. Retail Sales are forecasted to have contracted by 0.1% after expanding by 0.6% in December.
Author
Sagar Dua
FXStreet
Sagar Dua is associated with the financial markets from his college days. Along with pursuing post-graduation in Commerce in 2014, he started his markets training with chart analysis.
