Australian dollar extends its rise thanks to enhanced risk appetite.
During a quiet Asian session on Monday, the Australian Dollar (AUD) will look to extend its recent gains. Despite stable US Treasury yields, the US Dollar (USD) is dropping, weighing on the AUDUSD pair. Furthermore, the increase in Chinese new loans could give additional support for the Australian dollar.
The Australian money market fell on Monday, despite a record gain in US equities on Friday.
The Australian Dollar may experience some limits because of the decline in the Australian money market. Which disregarded a record gain in United States (US) markets on Friday and trended lower in early trade on Monday. Traders are taking a cautious stance ahead of key US inflation data. That could influence interest rate predictions.
Michele Bullock. Governor of the Reserve Bank of Australia (RBA), addressed parliament on Friday. Acknowledging recent good trends in inflation data while emphasizing the importance of ongoing progress toward the objective. She also hinted that if consumer spending declines faster than expected, rate cuts may be considered.
Chinese lenders often front-load loans at the start of the year. And January’s New Loans figures issued on Friday reflected this trend. With banks providing $4,920 billion Yuan, a record high that outperformed the December total of 1,170 billion Yuan by more than fourfold. However, fears of deflation in China are lowering mood, potentially exerting downward pressure on the Australian Dollar and acting as a negative for the AUDUSD pair. It is worth remembering that China’s markets are closed for the Lunar New Year holiday.
In January, the US CPI is predicted to fall by 3.0% year on year and 0.2% month on month.
The US Dollar Index (DXY) falls as a risk-on mentality prevails in the market, particularly ahead of the Consumer Price Index (CPI) data release on Tuesday. Analysts estimate that the CPI (Year-on-Year) for January will moderate to 3.0% from 3.4% in December. Furthermore, the monthly CPI is predicted to decline to 0.2% from 0.3%.Compared to the prior reading.
Dallas Federal Reserve (Fed) Bank President Lorie Logan stated on Friday that there is now no compelling urgency to cut interest rates. She welcomed “tremendous progress” in reducing inflation, but underlined the need for further evidence to guarantee that this improvement is sustainable. This opinion is consistent with US Fed Chair Jerome Powell’s rejection of the idea of a rate cut in March, which he expressed during a news conference following the interest rate decision on January 31.
Daily Market Movers: Australian Dollar Gains Ground Due to Risk-On Sentiment.
Australia’s AiG Industry Index in December fell to -27.3 from -22.4 the previous month.
Australia’s retail sales (QoQ) increased by 0.3% in the fourth quarter compared to the previous growth. of 0.2%.
The Commonwealth Bank of Australia (CBA) estimated a 75 basis point fall in the benchmark interest rate for 2024, with the first cut expected in September.
The Chinese Consumer Price Index (CPI) increased by 0.3% MoM in January, falling short of the predicted 0.4%. However, it is an improvement above the previous reading of 0.1%.
China’s annual CPI fell by 0.8%, beating the expected decrease of 0.5% and the preceding decline of 0.3%.
China’s Producer Price Index (YoY) fell by 2.5%, less than the projected 2.6% decrease.
US initial jobless claims fell to 218K in the week ending February 2 from 227K the previous week, exceeding the expected result of 220K.
US Continuing Jobless Claims fell to 1.871 million for the week ending The date is January 26. Market projections predicted a decline of 1.878 million from the prior reading of 1.894 million.
The four-week average of US first jobless claims increased to 212.25K in the week ending February 2, up from 208.5K the previous week.
The Atlanta Fed’s wage growth indicator fell to 5.0% in January, from 5.2% in December. This is the lowest growth rate since December 2021, which was 4.5%.
