Australian Dollar hovers above a major level despite softer monthly CPI

• Australian Dollar continues its winning streak despite downbeat Aussie monthly CPI.
• Australia’s Monthly Consumer Price Index declined by 4.9% in October against the expected 5.2%.
• US Dollar Index loses ground despite the better-than-expected US economic data.

The Australian Dollar (AUD) is on a winning streak, extending its gains for the fifth consecutive day on Wednesday. This surge is attributed to a heightened risk appetite in the market and the upward movement in commodity prices. Additionally, the softer US Dollar (USD), influenced by a less hawkish stance from the US Federal Reserve (Fed), is providing support to the AUD/USD pair.

Australia's Monthly Consumer Price Index (CPI) for October shows a reading of 4.9%, a decrease from the previous reading of 5.6% in September and slightly below the expected 5.2%. While the downbeat data have initially exerted some pressure, it seems that the Australian Dollar (AUD) has managed to recover from that pressure.

The US Dollar Index (DXY) has dipped to its lowest level since August 11 despite the better-than-expected Housing Price Index and Consumer Confidence data from the United States (US). The decline in US Treasury yields acted as an additional negative factor for the Greenback.

Fed Governor Christopher Waller’s comments, suggesting that if inflation consistently declines, there's no need to insist on maintaining high interest rates, further fueled the negative momentum for the Greenback.

Daily Digest Market Movers: Australian Dollar extends its gains despite downbeat Aussie data, softer US Dollar

• Australia’s seasonally adjusted Retail Sales data showed monthly readings for October, which declined by 0.2% against the market expectations of a 0.1% rise and 0.9% prior.
• Reserve Bank of Australia (RBA) Governor Michele Bullock highlighted that the current monetary policy is on the restrictive side, with rate hikes putting a damper on demand, particularly in the context of persistent services inflation.
• Governor Bullock emphasized the need for caution in employing high interest rates to combat inflation without inadvertently raising the unemployment rate.
• The People's Bank of China (PBoC) has issued a notice to strengthen financial support for private firms. This comprehensive support encompasses assistance for private enterprises in listing and financing, mergers and acquisitions, as well as restructuring.
• Federal Open Market Committee (FOMC) meeting minutes revealed that members decided unanimously to keep policy restrictive for some time until there is clear and sustainable evidence of inflation moving down toward the Committee's target.
• US Housing Price Index (MoM) remained consistent at 0.6% in September against the expected figure of 0.4%.
• The CB Consumer Confidence Index experienced an increase in November, rising to 102.0. This uptick comes after a downward revision of October figures, which were adjusted from 102.6 to 99.1.

Technical Analysis: Australian Dollar maintains its position above 0.6650 major level

The Australian Dollar trades higher around the 0.6670 level on Wednesday. The next significant resistance lies at the psychological level of 0.6700. A breakthrough above this level could potentially support the AUD/USD pair, allowing it to test the region around August's high at 0.6723. On the downside, the key support is positioned at 0.6650, followed by the seven-day Exponential Moving Average (EMA) at 0.6601. A decisive break below the EMA could potentially push the pair to reach the support near the 23.6% Fibonacci retracement level at 0.6569.

AUD/USD: Daily Chart