Australian Dollar extends gains after paring losses amid softer Aussie Retail Sales

• Australian Dollar recovers its intraday losses on risk-on sentiment.
• Australia’s Retail Sales (MoM) increased by 0.3%, against the expected 0.4% and 1.1% prior.
• US Dollar corrects ahead of US GDP Annualized data due on Thursday.

The Australian Dollar (AUD) manages to recover its intraday losses and extends its gains on Thursday. Challenges persisted for the AUD/USD pair due to softer Consumer Inflation Expectations and Retail Sales figures from Australia. These factors heightened expectations of the Reserve Bank of Australia (RBA) considering interest rate cuts in the second half of 2024. Additionally, Wednesday's release of the softer Australian Monthly Consumer Price Index supported this perspective.

Australia's consumer expectations for future inflation rose by 4.3% in March, a slight decrease from the previous increase of 4.5%. February's seasonally adjusted Retail Sales showed a month-over-month increase of 0.3%, falling short of the expected 0.4% and the prior 1.1%. Additionally, on Wednesday, Australia's Monthly Consumer Price Index (YoY) for February saw a 3.4% rise, maintaining consistency with previous levels but slightly below the anticipated 3.5%.

The US Dollar Index (DXY) appears to pause its two-day winning streak, edging lower in anticipation of the upcoming release of US Personal Consumption Expenditures (PCE) data scheduled for Friday. Nevertheless, the recent uptick in US Treasury yields may have lent support to the US Dollar (USD) amid divergent opinions among members of the Federal Open Market Committee (FOMC) regarding monetary policy easing.

Daily Digest Market Movers: Australian Dollar gains ground on improved risk appetite

• Australia’s Westpac Consumer Confidence dipped 1.8% to 84.4 in March 2024 from February's 86.0, easing from 20-month highs.
• Australia’s Westpac Leading Index (MoM) increased by 0.1% in February, against the previous decline of 0.09%.
• Australia's government has pledged to support a minimum wage increase aligned with inflation this year, recognizing the ongoing challenges low-income families face amid rising living costs.
• At the Boao Forum for Asia (BFA), China's top legislator, Zhao Leji, emphasized China's stance on inclusive economic globalization. He stated that China opposes unilateralism and protectionism in all their forms and is committed to closely linking its development with other countries.
• Federal Reserve Board Governor Christopher Waller still sees 'no rush' to cut rates amid sticky inflation data.
• Atlanta Fed President Raphael Bostic expressed his expectation for just one rate cut this year, cautioning that reducing rates prematurely could lead to greater disruption.
• Fed Governor Lisa Cook cautioned against easing policy too soon, warning that it could exacerbate the risk of inflation becoming entrenched.
• Chicago Fed President Austan Goolsbee, leaning towards a dovish stance, expects three cuts but indicates a need for more evidence of inflation subsiding before taking action.
• US Durable Goods Orders increased by 1.4% in February, against the 1.3% expected and previous decline of 6.9%.
• US Durable Goods Orders ex Defense rose by 2.2% in February, compared to the expected 1.1% and 7.9% previous decline.
• US Housing Price Index (MoM) decreased by 0.1% in January, against the December’s increase of 0.1%.

Technical Analysis: Australian Dollar could test the major barrier of 0.6550

The Australian Dollar trades near 0.6540 on Thursday. Immediate resistance is observed around the 23.6% Fibonacci retracement level at 0.6541, coinciding with the major barrier of 0.6550 and the 21-day Exponential Moving Average (EMA) at 0.6553. On the downside, a notable support level is at the psychological mark of 0.6500, followed by March’s low at 0.6477. A breach below this level may lead the AUD/USD pair to test the major support level at 0.6450.

AUD/USD: Daily Chart