Australian dollar may gain ground as a result of the bullish sentiment.
On Monday, the Australian Dollar (AUD) could extend its winning streak to three sessions in a row. The AUDUSD pair is trading just below the three-month high of 0.6590, and has benefited from the unfavorable sentiment around the US Dollar (USD). The mixed S&P Global PMI data has influenced this negative attitude, leading to the Aussie pair’s rise.
The Australian dollar rose in response to good market sentiment, fueled by reports of sustained monetary stimulus in Australia. China’s real estate market. This has lifted investors’ spirits, as evidenced by the excellent performance of equity markets.
RBA Governor Bullock’s comments back up the Aussie pair.
Furthermore, recent hawkish remarks by Reserve Bank of Australia (RBA) Governor Michele Bullock are helping the Aussie pair. Bullock noted that domestic demand is increasingly driving the inflation challenge, emphasizing that tighter monetary policy is the necessary reaction to demand-driven inflation.
US dollar appears to be reversing its losses as US bond yields rise.
The US Dollar Index (DXY) looks to recoup recent losses as US Treasury yields improve. This comes as the US Federal Reserve (Fed) is expected to soften monetary policy next year. However, while Fed policymakers hinted to the need for more tightening last week, they also highlighted that decisions will be based on incoming data in order to take appropriate actions to manage inflation concerns.
On the economic front, Australia and the United States have a busy week ahead. In Australia, RBA Bullock’s speech, retail sales, and inflation numbers will most certainly be widely monitored, providing insight into prospective monetary policy considerations. The Gross Domestic Product Annualized (Q3), Core PCE – Price Index, and ISM Manufacturing PMI will be major indicators in the United States (US).
Daily Market Movers: The Australian dollar appears to be on the rise as a result of RBA hawkish sentiment.
According to the minutes of the RBA meeting, the board recognized a “credible case” . Against a quick rate hike, but regarded the case for tightening stronger. Due to heightened inflation risks. The choice to tighten further would be based on statistics and risk assessment.
The National Australia Bank (NAB) expects another RBA rate hike. With the meeting scheduled for February 2024.
The Federal Open Market Committee (FOMC) meeting minutes suggested. That members would consider tightening monetary policy. Further if incoming data indicated inadequate progress toward the Committee’s inflation target.
Members of the FOMC unanimously agree. That policy should remain restrictive for a period of time until there is clear and sustainable evidence of inflation falling toward the Committee’s objective.
The November S&P Global Composite PMI for the United States remained constant at 50.7. The Services PMI increased from 50.6 in October to 50.8 in November. Exceeding the market consensus of 50.4. However, the Manufacturing PMI fell to 49.4 from 50.0, falling short of the predicted 49.8.
Australian Dollar Technical Outlook
The Australian dollar is trading below three-month highs. 0.6600 on the psychological scale
On Monday, the Australian Dollar is hovering around the 0.6580 level, slightly below the three-month high hit at 0.6590 on Friday. Which corresponds to psychological resistance at the 0.6600 level.
On the downside, the seven-day Exponential Moving Average (EMA) at 0.6550. Followed by the 23.6% Fibonacci retracement at 0.6513, could provide critical support. If the pair breaks through this level, it may test the key support at 0.6500.
