CFD Trading Rate Australian Dollar vs US Dollar (AUDUSD)

• AUD/USD holding steady near 0.6550 with RBA due early Tuesday.
• Wednesday brings the latest FOMC Meeting Minutes from the Fed.
• Australian Judo Bank PMIs slated for early Thursday.

AUD/USD is paddling in circles just below 0.6550 as the pair pulls into the center ahead of Tuesday’s showing from the Reserve Bank of Australia (RBA). Wednesday sees the Federal Reserve’s (Fed) latest Meeting Minutes from the Federal Open Market Committee (FOMC), and early Thursday sees Australia’s latest Purchasing Manager’s Index (PMI) figures for February.

The RBA is expected to hold steady on Tuesday and keep rates pinned where they are. Aussie labor figures disappointed markets recently, but it will likely take several months of soft employment numbers before the RBA gets pushed into a rate cut cycle.

The FOMC’s latest Meeting Minutes, due Wednesday, are going to draw plenty of investor attention as markets try to suss out when the US central bank will begin trimming interest rates. US inflation and a still-tight US labor market continue to flummox rate cut hopes from broader markets. Money markets are currently pricing in a first rate cut from the Fed in June, with the CME’s FedWatch Tool forecasting a 75% chance of at least 25 basis points in rate cuts in June, with at least a further 25 basis points expected in July.

The back half of the trading sees Australian Judo Bank PMI numbers for February, and the Composite Aussie PMI has only printed above 50.0 for four of the last twelve successive prints. Australia’s Judo Bank Services PMI last came in at 49.1, while the Manufacturing component last printed at 50.1.

AUD/USD technical outlook

AUD/USD bounced off the 200-hour Simple Moving Average (SMA) near 0.6510 late last week, leaving the pair positioned in the high end near-term, and the pair is poised for a fresh bullish run at the 0.6600 handle with the Aussie extending a recent bullish reversal. The pair is finding some technical resistance at recent swing highs into 0.6540.

The AUD/USD is looking for a foothold from a recent bottom near 0.6450 after the pair declined from December’s peak near 0.6870, and the pair is still down nearly 5% as January market flows struggle to stem the bearish tide.

AUD/USD hourly chart

AUD/USD daily chart

• AUD/USD trades back and forth near weekly high ahead of the Fed and the RBA minutes.
• The reopening of Chinese markets has provided some strength to the Australian Dollar.
• Stubborn US price pressures fail to provide support to the US Dollar.

The AUD/USD pair consolidates in a narrow range after a sharp rally to near 0.6550 in Monday’s late European session. The Aussie asset is expected to remain on edge ahead of the release of the Reserve Bank of Australia (RBA) and the Federal Reserve (Fed) minutes on Tuesday and Wednesday, respectively.

The reopening of Chinese markets after the Lunar New Year celebrations has improved the appeal of the Australian Dollar. Investors will focus on the interest rate decision by the People’s Bank of China (PBoC), which will be announced on Tuesday. The PBoC is expected to maintain a dovish stance as the Chinese economy faces deflation amid weak household spending and lower employment opportunities.

Being a proxy to the Chinese economy, the Australian Dollar strengthens on stimulus support from the PBoC.

Meanwhile, the US Dollar Index (DXY) remains under pressure despite robust United States consumer price inflation and Producer Price Index (PPI) data for January have dampened hopes of rate cuts by the Federal Reserve (Fed).

AUD/USD delivers a solid rally to near weekly high around 0.6540 on an hourly scale. The near-term outlook of the Aussie asset has turned bullish as it has stabilized above the 200-period Exponential Moving Average (EMA), which trades around 0.6517.

The 14-period Relative Strength Index (RSI) trades in the bullish range of 40.00-80.00, indicating more upside ahead.

More upside will appear if the asset breaks above the intraday high of 0.6552, driving the asset towards the round-level resistance of 0.6600, followed by the January 30 high at 0.6625.

In an alternate scenario, a downside move below February 15 low at 0.6477 would activate sellers and expose the asset to February 13 low at 0.6443 and the round-level support of 0.6400.

AUD/USD hourly chart

Having reached a late December high around 0.6871, AUD/USD dipped to 0.6500 this month. Economists at Rabobank analyze Aussie’s outlook.

EUR/AUD to trend lower to 1.5600 on a 12-month view

• AUD/USD trades in positive territory for four consecutive days near 0.6530. 
• The US January PPI came in stronger than expected, rising 0.3% MoM and 0.9% YoY.
• Financial markets are betting that the RBA will cut rates in the middle of the year.

The AUD/USD pair kicks off the new week on a positive note during the early Asian session on Monday. The uptick of the pair is supported by the decline of the US Dollar (USD). AUD/USD currently trades around 0.6530, losing 0.03% on the day. 

Data released by the US Labor Department on Friday showed that the Producer Price Index (PPI) in January increased by 0.3% MoM from a 0.1% decline in December. The gauge rose 0.9% in a year, also exceeding forecasts. The stronger data represent a rise in inflation pressure at the start of 2024. However, the Federal Reserve (Fed) needs more data to consider before starting to cut the interest rate.

Meanwhile, the upside of the pair might be capped by the rising tensions in the Middle East. The leader of Hezbollah, the Iran-backed militant group said it will broaden its war against Israel in the wake of recent strikes between the two sides. This, in turn, could boost a safe-haven currency like the US Dollar (USD) and act as a headwind for the AUD/USD pair. 

The Reserve Bank of Australia (RBA) hasn't been expected to cut rates until after the Fed. Investors are pricing in August as the likely start for RBA rate cuts. Inflation in Australia has cooled down, but the central bank cannot attribute all of this to monetary policy success.  

Looking ahead, the RBA minutes will be released on Tuesday, and the FOMC minutes for the 30-31 January meeting will be due on Wednesday. The Australian Judo Bank PMI data will be released on Thursday, and FOMC Vice Chair Jefferson is set to speak later on the same day.