Australian dollar gains ground as risk on mood improves.
The Australian Dollar (AUD) rises for the second day in a row on Thursday. The enhanced risk-on sentiment weighs on the US Dollar (USD), supporting the AUDUSD pair. Furthermore, the positive Australian Trade Balance statistics may provide support to the Aussie Dollar (AUD).
Australian Trade Balance increased to 11,437 million, exceeding the market expectation of 7,500 million.
According to the ABS, Australia’s trade surplus increased to 11,437 million in December, above the market expectation of 7,500 million and beyond the prior figure of 7,129 million. according to the most recent Bureau of Statistics report. While economic indicators in Australia provide a variety of perspectives, with the Monthly Consumer Price Index for November indicating a slight decrease and Retail Sales indicating an increase, lower-than-expected inflation figures in Australia also contribute to the perception of the RBA taking a pause at its next February meeting.
US dollar is under pressure as traders factor in the prospect of five rate cuts in 2024.
The US Dollar Index (DXY) falls as a result of lower US Treasury yields. Furthermore, traders’ risk appetite has improved as they speculate on the potential of five rate cuts in 2024. On Wednesday, New York Federal Reserve (Fed) President John Williams stated that financial markets remain highly responsive to new data. Williams expressed optimism about the Fed’s current situation and claimed that It is now appropriate to consider the future path of interest rates.
On Thursday, market participants will be looking for the release of the United States’ (US) Consumer Price Index (CPI) data for December. This economic data is critical for analyzing inflationary pressures and has the potential to dramatically influence market expectations about the US Federal Reserve’s monetary policy stance.
Daily Market Movers: The Australian Dollar rises as risk appetite improves.
The Australian Monthly Consumer Price Index (YoY) for November fell slightly short of the market forecast of 4.4%, falling short of the prior reading of 4.9%.
The Australian Bureau of Statistics released the seasonally adjusted Retail Sales (MoM) for November, which increased by 2.0% instead of the projected 1.2%, reversing the previous month’s trend. Previously, there was a 0.2% drop.
Australian Building Permits (MoM) fell to 1.6% from 7.5% previously, compared to a 2.0% drop predicted.
The Chinese Defense Ministry has urged the US to stop supporting provocations by some countries. China is urging the United States to follow the “One China Principle” and stop arming Taiwan. Furthermore, the ministry is pushing the US to rigorously limit front-line personnel and avoid exaggerating security concerns.
Atlanta Fed President Raphael W. Bostic stated on Monday that inflation has fallen more than expected and that he expects two quarter-point cuts by the end of 2024. Bostic expressed satisfaction with the present rate level and highlighted the necessity of giving the Fed’s tight policy time to work. should work on lowering inflation.
US Fed Governor Michelle W. Bowman stated that if the policy rate remains unchanged for some time, inflation could fall further. Bowman believes that the current policy stance is appropriately restrictive, but that lowering the Fed’s policy rate may become necessary if inflation falls closer to the 2% target.
Nonfarm payrolls in the United States increased to 216K in December.
Nonfarm payrolls in the United States increased to 216K in December, up from 173K in November. This amount exceeded the market’s anticipation of a 170K increase.
Year on year, average hourly earnings in the United States increased to 4.1% from 4.0% previously. Meanwhile, the monthly index stayed stable at 0.4%, despite a projected fall of 0.3%.
The US ISM Services Purchasing Managers Index (PMI) was 50.6 points higher than projected. 52.6 and 52.7 previously. While the Services Employment Index fell to 43.3 from 50.7 the previous month.
