Australian Dollar remains calm amid an improved US Dollar ahead of US Inflation data


Share:
  • Australian Dollar loses ground amid a stable US Dollar.
  • Australian Consumer Confidence jumped 6.2% to 86 in February.
  • The US Dollar holds ground despite subdued US Treasury yields.
  • US CPI YoY and MoM could moderate to 2.9% and 0.2%, respectively, in January.

The Australian Dollar (AUD) retreats after posting gains in the previous two sessions, despite the release of improved Australia Consumer Confidence data on Tuesday. The Westpac-Melbourne Institute Consumer Sentiment index surged 6.2% to 86 in February from 81 in January, marking its highest reading in 20 months. However, the index remained below the neutral 100 mark since February 2022.

Australian Dollar faces downward pressure as Australian inflation moderates, leading to the market sentiment that the Reserve Bank of Australia (RBA) has completed its monetary tightening cycle. This downward trend in the Aussie Dollar weighs on the AUD/USD pair. Additionally, the Australian money market's decline may further constrain the AUD's performance.

The US Dollar Index (DXY) holds steady after recent gains, with the decline in US Treasury yields capping the strength of the US Dollar (USD). Market sentiment is mixed, as traders exercise caution ahead of the release of important US inflation data scheduled for Tuesday, which could influence expectations regarding interest rates.

Daily Digest Market Movers: Australian Dollar declines amid a stable US Dollar

  • National Australia Bank's Business Confidence improved to the reading of 1 in January from the previous flat of 0.
  • National Australia Bank's Business Conditions decreased to 6 in January from 8 prior.
  • RBA's Head of Economic Analysis, Marion Kohler, emphasized uncertainty regarding current inflation projections for the Australian economy. However, she anticipates that price growth will eventually return to a more moderate level by 2025.
  • The Commonwealth Bank of Australia (CBA) forecasted a reduction of 75 basis points in the benchmark interest rate for 2024, with the initial cut anticipated in September.
  • China’s headline CPI declined by 0.8%, exceeding the anticipated decline of 0.5% and the previous decline of 0.3%.
  • Dallas Federal Reserve (Fed) Bank President Lorie K. Logan remarked on Friday that there is currently no pressing need to lower interest rates. She acknowledged "tremendous progress" in curbing inflation but emphasized the necessity for additional evidence to ensure the sustainability of this progress.
  • US Monthly Budget Statement came in with the reading of $-22B in January, against the expected reading of $-21B and $-129B prior.
  • 3-Month and 6-Month US Bill was auctioned at the rate of 5.23% and 5.065%, respectively.

Technical Analysis: Australian Dollar trades near 0.6530 before the 14-day EMA

The Australian Dollar trades near 0.6520 on Tuesday, situated below the immediate resistance of the 14-day Exponential Moving Average (EMA) at 0.6544 aligned with the major barrier at 0.6550 level. A breakthrough above this major level could potentially prompt the AUD/USD pair to target key levels such as the 23.6% Fibonacci retracement level at 0.6563 and the psychological resistance at 0.6600. On the downside, the psychological level of 0.6500 could act as immediate support. A break below the latter could push the AUD/USD pair to revisit the previous week’s low at 0.6468 followed by the major support level of 0.6450.

AUD/USD: Daily Chart

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 Swiss Franc.

  USD EUR GBP CAD AUD JPY NZD CHF
USD   0.03% -0.15% 0.02% 0.19% 0.18% 0.41% 0.60%
EUR -0.03%   -0.16% -0.01% 0.16% 0.16% 0.37% 0.57%
GBP 0.15% 0.19%   0.17% 0.34% 0.33% 0.56% 0.73%
CAD -0.03% 0.01% -0.17%   0.15% 0.15% 0.38% 0.58%
AUD -0.19% -0.15% -0.34% -0.17%   -0.01% 0.22% 0.42%
JPY -0.18% -0.13% -0.33% -0.16% 0.02%   0.22% 0.42%
NZD -0.39% -0.37% -0.54% -0.38% -0.22% -0.22%   0.22%
CHF -0.59% -0.55% -0.74% -0.56% -0.42% -0.41% -0.20%  

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).

Pound Sterling FAQs

What is the Pound Sterling?

The Pound Sterling (GBP) is the oldest currency in the world (886 AD) and the official currency of the United Kingdom. It is the fourth most traded unit for foreign exchange (FX) in the world, accounting for 12% of all transactions, averaging $630 billion a day, according to 2022 data.
Its key trading pairs are GBP/USD, aka ‘Cable’, which accounts for 11% of FX, GBP/JPY, or the ‘Dragon’ as it is known by traders (3%), and EUR/GBP (2%). The Pound Sterling is issued by the Bank of England (BoE).

How do the decisions of the Bank of England impact on the Pound Sterling?

The single most important factor influencing the value of the Pound Sterling is monetary policy decided by the Bank of England. The BoE bases its decisions on whether it has achieved its primary goal of “price stability” – a steady inflation rate of around 2%. Its primary tool for achieving this is the adjustment of interest rates.
When inflation is too high, the BoE will try to rein it in by raising interest rates, making it more expensive for people and businesses to access credit. This is generally positive for GBP, as higher interest rates make the UK a more attractive place for global investors to park their money.
When inflation falls too low it is a sign economic growth is slowing. In this scenario, the BoE will consider lowering interest rates to cheapen credit so businesses will borrow more to invest in growth-generating projects.

How does economic data influence the value of the Pound?

Data releases gauge the health of the economy and can impact the value of the Pound Sterling. Indicators such as GDP, Manufacturing and Services PMIs, and employment can all influence the direction of the GBP.
A strong economy is good for Sterling. Not only does it attract more foreign investment but it may encourage the BoE to put up interest rates, which will directly strengthen GBP. Otherwise, if economic data is weak, the Pound Sterling is likely to fall.

How does the Trade Balance impact the Pound?

Another significant data release for the Pound Sterling is the Trade Balance. This indicator measures the difference between what a country earns from its exports and what it spends on imports over a given period.
If a country produces highly sought-after exports, its currency will benefit purely from the extra demand created from foreign buyers seeking to purchase these goods. Therefore, a positive net Trade Balance strengthens a currency and vice versa for a negative balance.

Share: Feed news

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.

Follow us on Telegram

Stay updated of all the news

Join Telegram

Recommended content


Follow us on Telegram

Stay updated of all the news

Join Telegram

Recommended content

Editors’ Picks

EUR/USD hovers around 1.0850 ahead of US data

EUR/USD hovers around 1.0850 ahead of US data

EUR/USD is ranging at around 1.0850 in the European session on Tuesday. The pair stays supported amid a broadly subdued US Dollar and hawkish comments from ECB President Lagarde. The focus now shifts to the high-impact US economic data. 

EUR/USD News

GBP/USD holds steady below 1.2700, BoE-speak, US data eyed

GBP/USD holds steady below 1.2700, BoE-speak, US data eyed

GBP/USD is keeping its range trade intact below 1.2700 early Tuesday. A softer US Dollar and a cautious market mood are contributing to the bull-bear tug-of-war, as traders await the speeches from the BoE and the Fed policymakers alongside the US macro news. 

GBP/USD News

Gold price remains within striking distance of two-week high ahead of US macro data

Gold price remains within striking distance of two-week high ahead of US macro data

Gold price (XAU/USD) catches fresh bids following the previous day's modest downfall and remains well within the striking distance of over a two-week high touched last Thursday. 

Gold News

XRP price recoups losses as Ripple gears up to reveal blockchain roadmap for 2024

XRP price recoups losses as Ripple gears up to reveal blockchain roadmap for 2024

XRP price is influenced by the developments in Ripple and the updates in the SEC v. Ripple lawsuit. The altcoin climbed past the $0.56 level as the XRPLedger prepares to unveil its roadmap for 2024.

Read more

Calm before the data

Calm before the data

It feels like there is a moment of calm and silence in the aftermath of major tech earnings, investors will decide whether this rally deserves to continue higher straight away. 

Read more

Forex MAJORS

Cryptocurrencies

Signatures