Australian dollar rises for the second consecutive session against a stable US dollar.
The Australian Dollar (AUD) continued to rise on Tuesday, despite a stable US Dollar. The AUDUSD pair gained ground after US bond yields fell in the previous session, a pattern ascribed to the US’s stronger balance sheet. Since October 023, lower rates have helped to ensure the US Treasury’s long-term viability, while faster economic development has resulted in more tax receipts. The US Treasury Department has disclosed plans to borrow $760 billion in the first quarter, down from an earlier estimate of $816 billion in October.
In December, Australia’s retail sales (MoM) fell by 2.7%, compared to an expected decline of 0.9% and a prior growth of 2.0%.
On Tuesday, the Australian Bureau of Statistics announced seasonally adjusted Retail Sales (MoM) for December, which showed a 2.7% fall. This statistic compared with the predicted 0.9% decline and indicated a significant reversal from the prior gain of 2.0%. Surprisingly, the Australian dollar (AUD) gained despite the revelation of poor consumer expenditure figures. The AUD’s resiliency could be linked to favorable feelings emanating from news of fresh stimulus measures in China, thereby prompting The AUDUSD pair. Furthermore, on Wednesday, the Australian Consumer Price Index (CPI) is predicted to fall by 0.8% in the fourth quarter, down from 1.2% the previous quarter.
US dollar faced a threat from lower US yields due to the country’s better balance sheet.
The US Dollar Index (DXY) has stabilized after falling on Monday, owing to higher US Treasury yields. The risk aversion mood may worsen as US President Joe Biden’s government prepares to sanction military operations in response to the recent drone attack on a US outpost in Jordan, which killed three US personnel and injured at least 24 more.
Investors will pay particular attention to the Federal Open Market Committee’s (FOMC) statement, which is slated for Wednesday, January 31. The Fed Funds rate is expected to remain unchanged at 5.25-5.50%. However, the market’s current leaning toward a potential rate drop in March may put downward pressure on the US dollar (USD). Ahead of the FOMC statement, Tuesday’s Housing Price Index and Consumer Confidence statistics will be eagerly scrutinized for additional market insights.
Daily Market Movers: Australian Dollar Advances Amid Stable US Dollar.
Australia’s Manufacturing PMI rose from 47.6 to 50.3, indicating an improvement. Services PMI increased from 47.1 to 47.9. The Composite PMI increased to 48.1, up from 46.9 in December.
The Reserve Bank of Australia’s (RBA) Bulletin indicates that over the previous six months. Businesses usually foresee a reduction in their price growth. With prices expected to remain above the RBA’s inflation. The target range is 2.0–3.0%. According to Chinese financial media. The People’s Bank of China (PBoC) may lower the Medium-term Lending Facility (MLF) rate this quarter. The announcement follows PBoC Governor Pan Gongsheng’s recent statement. Which disclosed that the Bank would decrease the Required Reserve Ratio (RRR) by 50 basis points beginning February 5th.
The US Core Personal Consumption Expenditures Price Index (PCE) increased by 0.2% in December. As expected, compared to 0.1% in the prior report. The annual Core PCE increased 2.9%, falling short of the predicted 3.0% and the previous estimate of 3.2%.
The US Gross Domestic Product Annualized (Q4) reading was 3.3%. Compared to 4.9% the previous quarter, beating the market consensus of 2.0%.
