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AUD/USD steady amid US consumer confidence drop, Fed policy uncertainty

  • The AUD/USD pair holds near 0.6480 despite a sharp drop in US consumer confidence.
  • The University of Michigan Sentiment Index fell to 50.3 in November, well below expectations.
  • The US Dollar retreats as uncertainty persists over the Federal Reserve’s policy outlook.

AUD/USD trades sideways on Friday, around 0.6480 at the time of writing, following the release of a key indicator that showed a significant deterioration in US consumer confidence. The University of Michigan’s Consumer Sentiment Index dropped to 50.3 in November from 53.6 in October, missing expectations of 53.2, reflecting growing concerns about inflation and the broader economic outlook.

Breaking down the data, the Current Conditions Index fell to 52.3 from 58.6, while the Expectations Index declined to 49. Inflation expectations were mixed, with the 1-year outlook edging up to 4.7%, while the 5-year measure eased to 3.6%. This combination of persistent inflation worries and weak economic sentiment weighed on the US Dollar (USD), as markets increased bets on a more dovish stance from the Federal Reserve (Fed).

Investors now see a possible rate cut in December, with the CME FedWatch tool suggesting a 72% chance of such a move, compared to 63% a week ago. However, Fed Chair Jerome Powell has maintained a cautious tone, emphasizing the need for more data before making any policy decision. The decline in consumer sentiment, combined with a softer labor market, highlighted by over 153,000 job cuts in October according to the Challenger report, continues to fuel expectations of upcoming monetary easing.

In Australia, the Reserve Bank of Australia (RBA) kept its Official Cash Rate at 3.6% during its November meeting. Governor Michele Bullock stated that policymakers did not discuss rate reductions, while acknowledging that inflation remains too high. This cautious stance offers limited support to the Aussie, though concerns over China’s demand outlook continue to cap upside potential.

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 New Zealand Dollar.

USDEURGBPJPYCADAUDNZDCHF
USD-0.26%-0.21%0.05%-0.31%0.07%0.36%-0.27%
EUR0.26%0.05%0.30%-0.04%0.33%0.63%-0.01%
GBP0.21%-0.05%0.24%-0.13%0.29%0.58%-0.06%
JPY-0.05%-0.30%-0.24%-0.33%0.05%0.32%-0.30%
CAD0.31%0.04%0.13%0.33%0.38%0.65%0.04%
AUD-0.07%-0.33%-0.29%-0.05%-0.38%0.29%-0.34%
NZD-0.36%-0.63%-0.58%-0.32%-0.65%-0.29%-0.63%
CHF0.27%0.01%0.06%0.30%-0.04%0.34%0.63%

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 Australian Dollar from the left column and move along the horizontal line to the US Dollar, the percentage change displayed in the box will represent AUD (base)/USD (quote).

Author

Ghiles Guezout

Ghiles Guezout is a Market Analyst with a strong background in stock market investments, trading, and cryptocurrencies. He combines fundamental and technical analysis skills to identify market opportunities.

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