- AUD/USD has printed a fresh intraday high at 0.6645 as a correction in the USD Index has extended.
- Federal Reserve might continue a 25 bps rate hike move as January’s upbeat US economic data was a one-time show.
- An upbeat Australian Employment data has propelled the odds of more rates announcements from the Reserve Bank of Australia.
- AUD/USD is consolidation near the critical support plotted from 0.6585.
AUD/USD has printed a fresh intraday high at 0.6645 in the early European session amid upbeat Australian labor market data and extended correction from the US Dollar Index (DXY). The Aussie asset has stretched its recovery from below the round-level support of 0.6600 as investors are paring positions from the USD Index, backed by fears of the global banking crisis.
The US Dollar Index (DXY) has stretched its correction to near 104.40 as investors are shifting their focus on the uncertainty associated with an upcoming monetary policy from the Federal Reserve (Fed). On Wednesday, investors shifted their funds into the USD index to dodge volatility fueled by Credit Suisse’s fiasco.
S&P500 futures are holding significant gains generated in the Asian session after a sell-off on Wednesday, portraying a minor rebound in investors’ risk appetite. However, the overall market mood is quite risk-off. Fears of global financial instability propelled by the debacle of Credit Suisse have fueled demand for US government bonds. This has led to declining in the 10-year US Treasury yields to 3.48%.
Less-hawkish stance looks likely by Federal Reserve
A few days back, market participants were anticipating bigger rates announcement from the Federal Reserve (Fed) as January’s United States economic data conveyed the inflation outlook is extremely stubborn. However, the release of the downbeat US Retail Sales and lower-than-anticipated Producer Price Index (PPI) figures on Wednesday after softening of the Consumer Price Index (CPI) and the print of a higher Unemployment Rate have conveyed that January’s data was a one-time blip. This has cemented the odds of the continuation of smaller rate hikes. Also, fresh fears of banking sector turmoil have opened doors for a steady monetary policy.
Along with bringing down persistent inflation, restoring of investors’ confidence after the Silicon Valley Bank (SVB) collapse, has become an important Key Responsibility Area (KRA) for Fed chair Jerome Powell.
Upbeat Australian Employment fuels hope of more rates from RBA
The release of the better-than-anticipated Australian Employment data has added to troubles for the Reserve Bank of Australia (RBA), which is devoting significant time to bringing down the elevated inflation. In February, the Australian economy added fresh 64.6K payrolls, significantly higher than the consensus of 48.5K. Investors should note that the Australian economy reported 11.5K lay-offs in January. The Unemployment Rate has been trimmed further to 3.5% from the estimates of 3.6% and the prior release of 3.7%.
This indicates that the labor demand is extremely solid and further requirements of talent will be offset by higher offerings from the firms. Escalating labor cost index is sufficient to fuel inflationary pressures further. RBA Governor Philip Lowe might continue to target more rates as a higher laborforce in action would result in spiking inflationary pressures further.
Earlier, Australian Consumer Inflation Expectations (Mar) data that demonstrate inflation projections for the next 12 months dropped to 5.0% from the consensus of 5.4% and the former release of 5.1%. The impact of lower consumer inflation expectations looks to fade after solid Australian labor market data.
AUD/USD technical outlook
AUD/USD is oscillating in a broader range of 0.6548-0.6718 on a daily scale. The Aussie asset has turned sideways after drifting to near the horizontal support plotted from November 14 low at 0.6585. The 20-period Exponential Moving Average (EMA) at 0.6713 is barricading the Aussie bulls.
Failure by the Relative Strength Index (RSI) (14) in shifting into the 40.00-60.00 range indicates more downside is in pipeline.
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
EUR/USD posts highest daily close since early February Premium
EUR/USD looks on its way to test March highs after posting the highest daily close in almost two months. The pair peaked at 1.0925 on Thursday and then settled around 1.0900. The DXY is under pressure on risk appetite. Key inflation data from the US and the Eurozone will be released on Friday.
GBP/USD eyes 1.2400 as Pound outperforms
The Pound is among the top performers of the American session. GBP/USD is trading at the highest level in almost two months, near 1.2400. Risk flows are helping the pair while at the same time making it difficult for the US Dollar to find demand.
Gold: Bulls aiming to challenge the $2,000 threshold Premium
Spot Gold found demand during American trading hours and currently trades around the $1,980 level. Following a consolidative stage, the bright metal gained upward traction on the back of continued US Dollar weakness.
Cardano might have a bumpy road following a 25% recovery
Cardano price has had a disappointing run these last two weeks when compared to other major altcoins.
FTSE100 up for 4th day in a row, hits 2-week high
We’ve seen another positive day for European markets with the FTSE100 pushing up to its highest levels in 2 weeks, although it remains well short of reversing its March losses, unlike the DAX which has reversed nearly all its post 9th March decline.