AUDUSD continues under selling pressure for the fourth day in a row.
After an early bounce to the 0.6555-0.6560 level, the AUDUSD pair falls for the fourth consecutive day, reaching a two-week low during the Asian session on Thursday. Spot prices remain down near 0.6530 and have moved little in response to mixed Chinese trade data.
Despite the recent USD gain, China’s economic difficulties and RBA rate drop predictions weigh on the Australian dollar.
According to the Customs General Administration of China (CGAC), the trade surplus increased to $68.39 billion in November, up from $56.53 billion the previous month. According to the report’s further statistics, exports unexpectedly increased by 0.5% during the reported month. Nonetheless, imports fell short of consensus projections by a wide margin in November, falling 0.6%, raising fears about poor domestic demand. This comes on top of Moody’s downgrade of China’s credit outlook, state-owned enterprises, and banks, which dampens investors’ desire for risky assets.
This, together with the underwhelming Australian trade statistics and increased bets for a rate cut by the Reserve Bank of Australia (RBA) in August/September 2024, is undermining the China-proxy Australian Dollar (AUDUSD).
Dovish Fed predictions could limit USD gains and give some support to the AUDUSD pair.
Meanwhile, a softer risk tone helps the safe-haven US Dollar (USD) maintain its recent robust gains to a two-week high. on Wednesday, adding to the offered tone surrounding the AUDUSD pair. Nonetheless, dovish Federal Reserve (Fed) views limit additional USD advances and give some support to the major.
Investors appear to believe that the Federal Reserve has completed its policy tightening campaign and are now pricing in a 25 basis point rate decrease at the March policy meeting. Incoming US data confirmed the forecasts, indicating that a historically tight labor market may be relaxing. As a result, aggressive traders should exercise care before preparing for an extension of the AUDUSD pair’s recent steep fall from above the 0.6700 mark, or above a four-month high reached on Monday.
Market participants are now waiting for the regular Weekly Initial Jobless Claims data from the United States to provide some momentum later in the early North American session. The attention, however, will remain on Friday’s carefully watched US monthly job figures, known colloquially as the NFP report. The data will provide new clues about the US labor market and impact the Fed’s policy outlook, which will fuel USD demand and provide the AUDUSD pair a new directional push.
