- AUD/USD draws support from a softer USD downtick, though it lacks bullish conviction.
- The Fed’s hawkish stance and a weaker risk tone lend support to the safe-haven buck.
- The RBA’s dovish shift and China’s economic woes also contribute to capping the pair.
- Traders look to the US PCE Price Index for short-term opportunities later this Friday.
The AUD/USD pair attracts some dip-buyers near the 0.6215 area on Friday and turns positive for the second successive day on Friday, though it lacks bullish conviction. Spot prices currently trade around the mid-0.6200s and remain close to the lowest level since October 2022 touched on Thursday.
A modest pullback in the US Treasury bond yields keeps a lid on the recent US Dollar (USD) rally to a two-year peak, which, in turn, is seen as a key factor offering some support to the AUD/USD pair. That said, the Federal Reserve's (Fed) hawkish signal that it would slow the pace of interest rate cuts in 2025 should act as a tailwind for the US bond yields and the USD. Apart from this, the prevalent risk-off mood could underpin the safe-haven buck and cap further gains for the risk-sensitive Aussie.
Investors remain concerned about persistent geopolitical risks stemming from the protracted Russia-Ukraine war and tensions in the Middle East. Apart from this, worries about US President-elect Donald Trump's proposed tariffs, along with the threat of a partial US government shutdown at the end of the day on Friday, take its toll on the global risk sentiment. Furthermore, China's economic woes and the Reserve Bank of Australia's (RBA) dovish shift should contribute to keeping a lid on the AUD/USD pair.
Hence, it will be prudent to wait for strong follow-through buying before confirming that spot prices have formed a near-term bottom and positioning for any meaningful recovery. Next on tap is the release of the US Personal Consumption Expenditure (PCE) Price Index later during the early North American session. The Fed's preferred inflation gauge will influence the USD price dynamics and produce short-term opportunities around the AUD/USD pair heading into the weekend.
Economic Indicator
Personal Consumption Expenditures - Price Index (YoY)
The Personal Consumption Expenditures (PCE), released by the US Bureau of Economic Analysis on a monthly basis, measures the changes in the prices of goods and services purchased by consumers in the United States (US). The YoY reading compares prices in the reference month to a year earlier. Price changes may cause consumers to switch from buying one good to another and the PCE Deflator can account for such substitutions. This makes it the preferred measure of inflation for the Federal Reserve. Generally, a high reading is bullish for the US Dollar (USD), while a low reading is bearish.
Read more.Next release: Fri Dec 20, 2024 13:30
Frequency: Monthly
Consensus: 2.5%
Previous: 2.3%
Source: US Bureau of Economic Analysis
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 clings to strong gains near 1.1100 after mixed US data
EUR/USD trades at its highest level since early October near 1.1100 in the second half of the day on Thursday. The US Dollar (USD) stays under persistent selling pressure as investors react to mixed data releases, while the Trump administration's tariff announcements feed into stagflation fears.
GBP/USD consolidates gains after testing 1.3200
GBP/USD pulls away from the multi-month high it touched above 1.3200 but clings to strong daily gains near 1.3150. The US Dollar (USD) struggles to find demand following the mixed data releases and on investors' growing concerns about an economic downturn on the new trade regime.
Gold rebounds toward $3,100 following deep correction
Gold stages a rebound toward $3,100 after coming within a touching distance of $3,050 on Thursday. Falling US Treasury bond yields and the risk-averse market atmosphere following the "Liberation Day" tariffs seem to be helping XAU/USD find a foothold.
SOL is the winner as Solana chain turns into battleground for meme coin launchpad and DEX
Solana (SOL) gains nearly 2% in the last 24 hours and trades at 118.28 at the time of writing on Thursday. A Decentralized Exchange (DEX) and a meme coin launchpad built on the Solana blockchain have waged a war for users and compete for the trade volume on the chain.
Trump’s “Liberation Day” tariffs on the way
United States (US) President Donald Trump’s self-styled “Liberation Day” has finally arrived. After four straight failures to kick off Donald Trump’s “day one” tariffs that were supposed to be implemented when President Trump assumed office 72 days ago, Trump’s team is slated to finally unveil a sweeping, lopsided package of “reciprocal” tariffs.
The Best brokers to trade EUR/USD
SPONSORED Discover the top brokers for trading EUR/USD in 2025. Our list features brokers with competitive spreads, fast execution, and powerful platforms. Whether you're a beginner or an expert, find the right partner to navigate the dynamic Forex market.