- AUD/USD retreats from intraday high but reverses the week-start losses.
- Australia’s Westpac Consumer Confidence match upbeat forecasts for July, NAB figures came in firmer for June.
- US inflation expectations join downbeat NFP to raise doubts about hawkish Fed talks.
- Wednesday’s US CPI will be the key as China-linked fears prod Aussie pair buyers.
AUD/USD justifies upbeat sentiment data from Australia, as well as cheers broad US Dollar weakness, as bulls prod the key 0.6700 upside hurdle amid early Tuesday. In doing so, the Aussie pair also benefits from the downbeat US inflation expectations, as well as the softer US jobs report, while paying little heed to the recently hawkish Fed talks and softer inflation fears in China.
Australia’s Westpac Consumer Confidence for July jumps 2.7%, matching analysts’ estimation, versus 0.2% prior whereas the monthly business sentiment figures from the National Australia Bank (NAB) also flash upbeat outcomes for June. That said, the NAB’s Business Conditions improve to 9 from 8 while the Business Confidence rose to 0.0% versus -4.0 prior.
While the Aussie sentiment figures keep the buyers hopeful, the latest US inflation expectations flagged fears of deflation, especially after the previous day’s downbeat China Consumer Price Index (CPI) and Producer Price Index (PPI).
That said, the Federal Reserve Bank of New York's monthly Survey of Consumer Expectations suggests that the US consumers' one-year inflation expectation dropped to the lowest level since April 2021 at 3.8% in June from 4.1% in May.
The downbeat US inflation clues follow Friday’s disappointment from the headline job numbers to drown the US Dollar. It should be observed that the latest US employment report for June marked a negative surprise and offered a big blow to the US Dollar, making it post the biggest daily loss in three weeks on Friday. However, Monday’s downbeat prints of China inflation data flagged fears of deflation in the world’s biggest industrial player, which in turn allowed the US Dollar to lick its wounds.
Even so, the Federal Reserve (Fed) officials remain hawkish and prod the AUD/USD bulls. On Monday, San Francisco Fed President Mary Daly said, "We're likely to need a couple more rate hikes over the course of this year to really bring inflation sustainably back to the Fed's 2% goal." On the same line, Cleveland Fed President Loretta Mester also said that the Fed will need to tighten the monetary policy "somewhat further" to lower inflation. Furthermore, Federal Reserve Vice Chair for Supervision Michael Barr said, "We are quite attentive to bringing inflation down to target."
Amid these plays, S&P500 Futures trace upbeat Wall Street performance while the US Treasury bond yields remain pressured. That said, the benchmark US 10-year Treasury bond yields printed the first daily loss in July the previous day whereas the two-year counterpart declined for the second consecutive day, to respectively near 4.00% and 4.86%
Looking ahead, AUD/USD pair traders should pay attention to the risk catalysts for intraday directions as the economic calendar appears mostly empty ahead of the key Wednesday.
Technical analysis
Although the AUD/USD bulls remain in the driver’s seat past 0.6600, a fortnight-old descending resistance line and the 200-DMA challenge the pair’s upside momentum respectively near 0.6690 and 0.6700.
Information on these pages contains forward-looking statements that involve risks and uncertainties. Markets and instruments profiled on this page are for informational purposes only and should not in any way come across as a recommendation to buy or sell in these assets. You should do your own thorough research before making any investment decisions. FXStreet does not in any way guarantee that this information is free from mistakes, errors, or material misstatements. It also does not guarantee that this information is of a timely nature. Investing in Open Markets involves a great deal of risk, including the loss of all or a portion of your investment, as well as emotional distress. All risks, losses and costs associated with investing, including total loss of principal, are your responsibility. The views and opinions expressed in this article are those of the authors and do not necessarily reflect the official policy or position of FXStreet nor its advertisers. The author will not be held responsible for information that is found at the end of links posted on this page.
If not otherwise explicitly mentioned in the body of the article, at the time of writing, the author has no position in any stock mentioned in this article and no business relationship with any company mentioned. The author has not received compensation for writing this article, other than from FXStreet.
FXStreet and the author do not provide personalized recommendations. The author makes no representations as to the accuracy, completeness, or suitability of this information. FXStreet and the author will not be liable for any errors, omissions or any losses, injuries or damages arising from this information and its display or use. Errors and omissions excepted.
The author and FXStreet are not registered investment advisors and nothing in this article is intended to be investment advice.
Recommended content
Editors’ Picks
AUD/USD loses ground due to the absence of a hawkish RBA
The Australian Dollar has plunged following the Reserve Bank of Australia's decision to maintain its interest rate at 4.35% on Tuesday. Investors sentiment leaned toward a potentially more hawkish stance from the RBA, particularly after last week's inflation data surpassed expectations.
EUR/USD edges lower to near 1.0750 after hawkish remarks from a Fed official
EUR/USD extends its losses for the second successive session, trading around 1.0750 during the Asian session on Wednesday. The US Dollar gains ground due to the expectations of the Federal Reserve’s prolonging higher interest rates.
Gold price remains on the defensive on a firmer US Dollar
Gold price attracts some sellers on the firmer US Dollar during the Asian trading hours on Wednesday. The hawkish remarks from Federal Reserve officials dampen hopes for potential interest rate cuts in 2024 despite weaker-than-expected US employment reports in April.
FTX files consensus-based plan of reorganization, awaits bankruptcy court approval
FTX has filed a consensus-based plan for its reorganization, coming almost two years after the now defunct FTX filed for Chapter 11 Bankruptcy Protection in the District of Delaware.
Living vicariously through rate cut expectations
U.S. stock indexes made gains on Tuesday as concerns about an overheating U.S. economy ease, particularly with incoming economic reports showing data surprises at their most negative levels since February of last year.