Australian dollar consolidates below a psychological threshold as it awaits US nonfarm payrolls.
The Australian Dollar (AUD) continued its upward trend on Friday, recovering from a three-month low of 0.6508 on Thursday. The US Dollar (USD) was under pressure following mixed economic statistics from the United States (US). Furthermore, the Australian Dollar (AUD) benefited from stronger Producer Price Index (PPI) data. As a result, these variables together provide upward support for the AUDUSD pair.
Australia’s PPI (YoY) increased by 4.1% in Q4, above the previous growth rate of 3.8%.
The Australian Bureau of Statistics has issued the PPI (YoY) for the fourth quarter, which shows an improvement of 4.1%, above the prior growth rate of 3.8%. Furthermore, an improved Australian money market is helping to strengthen the Aussie Dollar. In a Reuters poll, economists unanimously predict the Reserve Bank of Australia (RBA) to maintain the interest rate at 4.35% at its February policy meeting.
Former RBA board member Warwick McKibbin stated that the cash rate might remain around 4.5% for some time.
Warwick McKibbin, a former RBA board member, believes that the Australian cash rate will remain around 4.5% for an extended period. However, the Australian Dollar has had problems, with bond traders anticipating early interest rate reduction from the Reserve Bank of Australia following an unexpectedly weak quarterly inflation report. Futures markets are completely priced in. In 2024, there will be two quarter-point decreases, the first of which is scheduled for August.
The predicted fall in US nonfarm payrolls may further weaken the US dollar.
The US Dollar Index (DXY) fell in the aftermath of mixed US economic data reported on Thursday, worsened by low US Treasury yields. Initial jobless claims for the week ending January 26 increased to 224K, exceeding the prior increase of 215K and the projected result of 212K. However, the ISM Manufacturing PMI improved, climbing to 49.1 from 47.1 the previous month, exceeding the expected number of 47.0 for January. Additional labor data, such as US average hourly earnings and nonfarm payrolls (NFP), are anticipated to be released on Friday.
Daily Market Movers: Australian Dollar Strengthens on Positive The Australian Producer Price Index (QoQ) increased by 0.9% in the fourth quarter.
Quarterly increase was lower than the previous quarter’s rate of 1.08%.
Australia’s investment lending for homes fell by 1.3% in December, compared to a previous growth rate of 1.9%.
Australia’s home loans declined 5.6% in December, compared to a 0.5% increase in November.
The preliminary US Nonfarm Productivity climbed by 3.2% in Q4. Exceeding the projected 2.5% but falling from the prior reading of 4.9%.
US Challenger Job Cuts increased to 82.307K in January from 34.817K in December.
US unit labor costs rose 0.5% in the fourth quarter. Compared to 1.7% predicted, up from -1.1% the previous quarter.
