Australian dollar’s winning streak comes to an end amid a muted US dollar.

On Monday, the Australian Dollar (AUD) ended its three-day winning streak against a lower US Dollar (USD). The benchmark S&P/ASX 200 Index fell at the start of the week. Falling sharply from all-time highs as investors booked profits. The reduction was especially noticeable in the materials and healthcare sectors. Furthermore, Australian equities followed the drop in technology stocks on Wall Street on Friday. Which has limited the strength of the AUDUSD pair.

Last week, the Australian dollar gained 1.60% against the US dollar. Spurred by rising anticipation that the US Federal Reserve (Fed) may begin interest rate decreases earlier than other major central banks. However, the Australian economy grew slower than expected in the fourth quarter. And the trade balance surplus fell short of expectations. These economic data support the notion that the Reserve Bank of Australia (RBA) should contemplate rate decreases in the near future.

In February, China’s CPI climbed by 0.7% year on year and 1.0% month on month.

The US Dollar Index (DXY) remains unchanged as traders remain cautious. Ahead of the February US Consumer Price Index (CPI) data. Which is due on Tuesday. Investors will eagerly observe a panel discussion at AFR Business. Sarah Hunter, Assistant Governor (Economics) at the Reserve Bank of Australia, is scheduled to speak at a summit in Sydney on Tuesday. The release of the Australian Westpac Consumer Confidence for March will also draw notice.

Daily Market Movers: Australian Dollar falls on weaker equity market.

The Australian Trade Balance (MoM) reported a surplus of 11,027 million in February, up from 10,743 million the previous month. The market expected a gain of 11,500M.
The Australian Gross Domestic Product (GDP) increased by 0.2% quarter on quarter in the fourth quarter of 2023, falling slightly short of market estimates of no change at 0.3%. GDP (YoY) increased by 1.5%, above the predicted 1.4% but falling short of the prior growth rate of 2.1%.
Jim Chalmers, Australia’s treasurer, has indicated that the government will eliminate over 500 import duties on a wide range of products beginning July 1, 2024. This effort seeks to lower compliance expenses for businesses. The removal of these tariffs will streamline around A$8.5 billion in yearly trade, saving firms over A$30 million in compliance expenses each year.
In February, China’s Consumer Price Index (CPI) rose by 0.7% year on year, rebounding from a 0.8% drop in January and exceeding market estimates of a 0.3% increase. CPI inflation (MoM) increased by 1.0%, up from 0.3% in January and above market expectations of 0.7%.
The Chinese Producer Price Index (PPI) fell 2.7% YoY in February, compared to a 2.5% drop in January. This data came back weaker than Market forecasts predicted a 2.5% decrease.
In his speech before the US Congress last week, Federal Reserve (Fed) Chairman Jerome Powell maintained the central bank’s view. Powell signaled that borrowing costs could be decreased this year. However, he highlighted that any moves would be contingent on the inflation trajectory matching the Fed’s target of 2%.
Loretta Mester, President of the Cleveland Fed, addressed the Virtual European Economics and Financial Center, expressing concern about inflation’s possible persistence throughout the year. She suggested that if the economy performs as expected, rate decreases could be implemented later this year.
According to the CME FedWatch Tool, the probability of a rate cut in March has decreased slightly. May, with possibilities of 3.0% and 24.5%, respectively. However, the possibility of a 25 basis point rate drop in June has climbed to 57.2%.

Nonfarm payrolls increased by 275K in February, exceeding previous estimates of 200K and 229K.

US nonfarm payrolls climbed by 275K in February, surpassing January’s figure of 229K and beyond estimates of 200K.
US average hourly earnings (YoY) increased by 4.3%, falling slightly short of both February’s projection and the previous reading of 4.4%. On a monthly basis, there was a 0.1% gain, which was less than the expected 0.3% and 0.5% from the prior month.
US initial jobless claims remained constant at 217K for the week ending March 1, versus the predicted 215K.
US nonfarm productivity continued to expand at 3.2% in the fourth quarter of 2023, beating the market consensus of 3.1%.
February’s The US ADP Employment Change came in at 140K, compared to the predicted 150K, up from 111K previously.