- AUD/USD falls following hawkish signals from Fed officials, emphasizing no immediate rate cuts.
- US economic indicators strengthen, with the Philadelphia Fed Manufacturing Index hitting a new high since April 2022.
- Australian employment data disappoints, with job losses and a slight increase in the unemployment rate casting shadows over RBA forecasts.
The Aussie Dollar is on the defensive against the US Dollar, as Friday’s Asian session commences. On Thursday, the antipodean clocked losses of 0.21% against its counterpart, driven by Fed officials emphasizing they’re in no rush to ease policy. The AUD/USD trades at 0.6419 at the time of writing.
AUD/USD slumped on Fed officials’ comments
A reflection of that was Wall Street’s finishing in the red. On Thursday, Atlanta’s Fed President Raphael Bostic was hawkish, questioning that they could not be able to cut rates towards the end of the year. His colleague, John Williams from the New York Fed, said that the current policy is in a good place and that patience is required before lowering rates. Although he doesn’t consider hiking rates as his base scenario, he added the Fed would raise them if needed.
US data revealed that manufacturing activity is gaining steam. The Philadelphia Fed Manufacturing Index experienced a significant increase, jumping to 15.5, far surpassing the modest expectation of 1.5, its highest level since April 2022. In the jobs market, Initial Jobless Claims for the last week were unchanged at 212K, while Continuing Claims edged up to 1.812 million, below estimates.
Given the solid fundamental backdrop, traders had priced in two rate cuts by the Fed for 2024. Data from the Chicago Board of Trade (CBOT) shows investors project the Federal funds rate (FFR) to end at 5.07%.
On the Aussie front, jobs data declined by 6.6K in March, missing estimates, while the unemployment rate edged up from 3.7% to 3.8%. According to ANZ Analysts, “the labour market may be running slightly hotter than the RBA forecast at the time of its February Statement on Monetary Policy. The RBA was forecasting employment growth to slow to 2.0% y/y and the unemployment rate to reach 4.2% by the end of the June quarter this year.”
AUD/USD Price Analysis: Technical outlook
The AUD/USD has shifted bearishly after the exchange rate fell below the latest cycle low of 0.6442 on February 13, the previous year-to-date (YTD) low. Hence, a continuation is expected, but sellers must surpass the 0.6400 mark. A breach of the latter will expose the November 10, 2023, daily low of 0.6338 an intermediate support level, followed by a major cycle low printed on October 26, 2023, at 0.6270. On the other hand, buyers need to push prices toward the 0.6500 figure, if they would like to remain hopeful of higher prices.
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: Extra gains in the pipeline above 0.6520
AUD/USD partially reversed Tuesday’s strong pullback and regained the 0.6500 barrier and beyond in response to the sharp post-FOMC pullback in the Greenback on Wednesday.
EUR/USD meets support around 1.0650
EUR/USD managed to surpass the key 1.0700 barrier in response to the intense retracement in the US Dollar in the wake of the Fed’s interest rate decision and Chair Powell’s press conference.
Gold surpasses $2,300 as Dollar tumbles
The precious metal maintains its constructive stance and trespasses the $2,300 region on Wednesday after the Federal Reserve left its FFTR intact, matching market expectations.
Bitcoin price reclaims $59K as Fed leaves rates unchanged
The market was at the edge of its seat on Wednesday to see whether the US Federal Reserve (Fed) would cut interest rates during the Federal Open Market Committee (FOMC) meeting.
The market welcomes the Fed's statement
The market has welcomed the Fed statement, and the S&P 500 is higher in its aftermath, the dollar is lower and Treasury yields are falling. There is still only one cut priced in by the Fed.