Australian dollar hovering below a key level aided by weaker USD.
The Australian Dollar (AUD) retraces recent losses on Friday, aided by a weaker US Dollar (USD). The AUDUSD pair fell in the previous session as the US dollar gained strength. Probably due to higher US Treasury yields. The Australian Dollar, on the other hand, is strengthening. As market players anticipate a dovish posture from the Federal Reserve (Fed) on interest rates in early 2024.
Future interest rate decisions by the Australian central bank will be data-dependent.
The Reserve Bank of Australia’s (RBA) recent meeting minutes underlined the RBA’s Prior to making future interest rate decisions, the emphasis is on carefully evaluating fresh data to assess the balance of risks. In this opinion, the resilience demonstrated by inflation and property prices is critical. The RBA’s prediction of inflation attaining the upper limit of the 2-3% target by the end of 2025 suggests a cautious but confident perspective. The assumption that the RBA would avoid a rate decrease at its upcoming policy meeting in February lends support to the Australian Dollar (AUD).
Downbeat US economic data strengthens predictions on a dovish Fed.
The US Dollar Index (DXY) rose on Thursday, despite the fact that less-than-optimistic US statistics may have dampened the Greenback’s rise, potentially pushing the Federal Reserve to take a more cautious approach in upcoming monetary policy decisions. The unexpected increase in Initial Jobless Claims in the United States This story is supported by an increase in Pending Home Sales (MoM) to 218K for the week ending December 23, exceeding the expected 210K, and an unchanged Pending Home Sales (MoM) at 0.0% in November versus the predicted 1.0% increase. Traders are now waiting for the release of the Chicago Purchasing Managers’ Index for December on Friday for more information.
Daily Market Movers: The Australian Dollar strengthens due to increased risk appetite and hawkishness RBA.
RBA Private Sector Credit (MoM) increased by 0.4% in November, exceeding the preceding gain of 0.3%. However, year-over-year data showed a 4.7% fall, compared to the preceding 4.8% increase.
In its most recent Meeting Minutes, the RBA emphasized the importance of gathering further evidence to determine the balance of risks before deciding on future interest rates.
National Development and Reform in China Zheng Shanjie, Chairman of the National Development and Reform Commission (NDRC), stated in a meeting on Tuesday that China will work to increase domestic demand, ensure a quick economic recovery, and promote stable growth.
China’s industrial profits fell 4.4% year on year from January to November. Signaling a slowdown and emphasizing the need for extra policy support from Beijing to boost development in the world’s second-largest economy.
Former Dallas Federal Reserve President Robert Kaplan underlined. That the Federal Reserve is being cautious in order to avoid a scenario in which monetary tightening becomes unduly restrictive.
The US Richmond Fed Manufacturing Index fell 11 points in December. Beating the market’s projection of a 7-point drop. This follows a 5-point drop in November.
Housing Costs in the United States Index (MoM) fell to 0.3% from 0.7% the previous month. Falling short of 0.5% estimates in October.
