|

AUD/USD spikes back above 0.6660 as dovish Fed sends US Dollar tumbling

  • The AUD/USD is back into the high side after the Fed signals the end of rate hikes.
  • FOMC rate outlook sees three rate cuts in 2024.
  • Aussie sees strong Wednesday performance against weakening Greenback.

The AUD/USD is catching a firm risk-bid as markets surge higher following a dovish pivot to the  Federal Reserve’s (Fed) policy stance; the Fed now sees at least three rate cuts in 2024, for a combined 75 basis points in rate cuts next year.

Powell speech: Difference in projections reflect lower inflation than previously expected

The Australian Dollar (AUD) is one of the best-performing currencies of the majors bloc on Wednesday, seeing a firm bullish break to climb 1.5% against the US Dollar (USD) on the day. The Fed’s dot plot adjustment on Wednesday still falls well short of market expectations, but does a good job of meeting investors at the halfway mark: money markets are currently pricing in a combined 140 basis points of rate cuts for 2024, with the first cut potentially expected as soon as the March Fed meeting.

Read More: Jerome Powell speaks on policy outlook after holding policy rate steady

With the Fed easing back from its hawkish policy stance in the face of steadily declining inflation, broad-market risk appetite is rebounding heading into the latter half of the trading week.

Fed Statement comparison: December vs November

The economic calendar still isn’t done with the AUD/USD this week; early Thursday sees Australian labor figures, to be followed up by US Retail Sales and US S&P Global Purchasing Manager Index (PMI) figures heading into Friday.

There’s still plenty of time left in the trading week for the Aussie to squander its lead against the US Dollar, with the Australian Unemployment Rate expected to tick up from 3.7% to 3.8% in November, while Australian jobs additions are forecast to slump to 11K in November from October’s 55K print.

US Retail Sales for November are expected to print at -0.1%, a minor decline but in-line with October’s -0.1%.

December’s US PMI figures are forecast to see slight declines in both the Services and Manufacturing components; US Services PMI is forecast to print at 49.3 versus the previous 49.4, while the Manufacturing PMI is seen declining slightly from 50.8 to 50.6.

Australian Dollar price today

The table below shows the percentage change of Australian Dollar (AUD) against listed major currencies today. Australian Dollar was the strongest against the US Dollar.

 USDEURGBPCADAUDJPYNZDCHF
USD -0.75%-0.43%-0.61%-1.50%-1.54%-1.05%-0.46%
EUR0.78% 0.36%0.19%-0.71%-0.74%-0.27%0.33%
GBP0.37%-0.37% -0.18%-1.12%-1.11%-0.63%-0.09%
CAD0.60%-0.14%0.18% -0.91%-0.93%-0.46%0.12%
AUD1.50%0.74%1.10%0.93% 0.00%0.49%1.02%
JPY1.53%0.72%1.11%0.92%-0.04% 0.49%1.02%
NZD1.00%0.27%0.63%0.45%-0.48%-0.52% 0.55%
CHF0.46%-0.28%0.08%-0.09%-1.03%-1.03%-0.55% 

The heat map shows percentage changes of major currencies against each other. The base currency is picked from the left column, while the quote currency is picked from the top row. For example, if you pick the Euro from the left column and move along the horizontal line to the Japanese Yen, the percentage change displayed in the box will represent EUR (base)/JPY (quote).

AUD/USD Technical Outlook

The AUD/USD has seen a hard rally on the intraday charts, breaking through and soaring well above the 200-hour Simple Moving Average (SMA) just below 0.67590, and bids are now testing back into the 0.6660 and within reach range of December's peak bids near 0.6690, with the 0.6700 handle just beyond that.

0.6550 is forming up into a significant technical floor for the AUD/USD, etching in a technical higher low in the pair's medium-term trend that has the Aussie rising from October's bottom bids near the 0.6300 handle.

The AUD/USD is testing into familiar consolidation territory that plagued the pair in the early half of 2023, and bulls will be looking to capitalize off of any technical pullbacks towards the 200-day SMA which is currently near 0.6575.

AUD/USD Hourly Chart

AUD/USD Daily Chart

AUD/USD Technical Levels

AUD/USD

Overview
Today last price0.6665
Today Daily Change0.0105
Today Daily Change %1.60
Today daily open0.656
 
Trends
Daily SMA200.6573
Daily SMA500.6455
Daily SMA1000.6462
Daily SMA2000.6575
 
Levels
Previous Daily High0.6612
Previous Daily Low0.654
Previous Weekly High0.6691
Previous Weekly Low0.6526
Previous Monthly High0.6677
Previous Monthly Low0.6318
Daily Fibonacci 38.2%0.6568
Daily Fibonacci 61.8%0.6585
Daily Pivot Point S10.6529
Daily Pivot Point S20.6498
Daily Pivot Point S30.6456
Daily Pivot Point R10.6601
Daily Pivot Point R20.6643
Daily Pivot Point R30.6674

Author

Joshua Gibson

Joshua joins the FXStreet team as an Economics and Finance double major from Vancouver Island University with twelve years' experience as an independent trader focusing on technical analysis.

More from Joshua Gibson
Share:

Editor's Picks

GBP/USD clings to daily gains near 1.3350

GBP/USD holds just in positive territory around 1.3350 on Friday as the Greenback keeps a vacillating price action. With Fed rate hike expectations easing and US markets closed for the Independence Day holiday, Cable remains on track to post solid weekly gains.

EUR/USD remains sidelined around 1.1440

EUR/USD holds on to its recent gains and consolidates around 1.1440 at the end of the week as the US Dollar lacks clear direction. In the meantime, trading conditions remain subdued, with volatility constrained by the closure of US markets for the Independence Day holiday.

Gold flirts with two-week highs, targets $4,200

Gold extends its recovery for a third straight day, advancing toward the $4,200 mark per troy ounce on Friday. The precious metal looks set to snap a four-week losing streak as softer-than-expected June US NFP data prompt investors to scale back expectations of further Fed tightening.

Crypto Today: Bitcoin, Ethereum, XRP advance amid renewed capital inflows

Bitcoin maintains its upward momentum, holding above the $61,000 mark at the time of writing on Friday. Major altcoins such as Ethereum and Ripple are also posting gains, signaling a modest uptick in market sentiment and renewed risk appetite among investors.

The Iran war failed to trigger a recession. Can the US economy keep defying expectations?

Nearly four months after the start of the Iran war, the US economy remains remarkably resilient. While the conflict initially triggered a severe disruption to global energy markets and a sharp rise in Oil prices, recent diplomatic progress between Washington and Tehran has eased concerns about a prolonged supply shock.

Kevin Warsh offers no policy clues: Why markets still got their answer

Financial markets came to Sintra looking for clues about the Federal Reserve's (Fed) next move. They largely left with confirmation that Fed Chair Kevin Warsh intends to make those clues much harder to find.