Australian Dollar rises on positive employment figures, dovish remarks by Fed

• Australian Dollar extends gains on positive economic data from Australia.
• Australian Employment Change surged to 116.5K in February, exceeding expectations of 40.0K.
• US Dollar weakens following the Fed's reaffirmation of expectations for three interest rate cuts in 2024.

The Australian Dollar (AUD) continued its upward momentum for the second consecutive session on Thursday, likely buoyed by positive employment data from Australia. Concurrently, the US Dollar (USD) saw a significant decline following the Federal Open Market Committee's (FOMC) decision to maintain rates at 5.5% during Wednesday's policy meeting. This decision provided support for the AUD/USD pair. Furthermore, remarks made by US Federal Reserve (Fed) Chair Jerome Powell in the post-meeting press conference, signaling a dovish stance, exerted additional downward pressure on the Greenback.

Australian equity market surrendered its intraday gains and slipped into negative territory. This could potentially limit the AUD's advance. However, earlier in the trading day, the ASX 200 Index surged by nearly 1.0%, aligning with a rally on Wall Street from the previous session.

The US Dollar Index (DXY) exhibited a gap down on Thursday following its significant decline in the preceding session. Weaker US Treasury yields contributed to the losses in the US Dollar, which were likely influenced by the Fed's reaffirmation of expectations for three interest rate cuts in 2024.

Daily Digest Market Movers: Australian Dollar appreciates on positive market sentiment

• Australian Employment Change for February surged to 116.5K, surpassing expectations of 40.0K and the previous figure of 15.3K.
• Australia’s Unemployment Rate increased by 3.7%, lower than the anticipated 4.0% and the previous 4.1%.
• The preliminary Judo Bank Services PMI rose to 53.5, up from the previous figure of 53.1.
• Judo Bank Composite PMI showed a slight increase, reaching 52.4 compared to the previous 52.1.
• People’s Bank of China (PBoC) has kept its interest rate unchanged at 3.45%.
• Chinese Foreign Minister Wang Yi met Australia's Foreign Affairs Minister Penny Wong. The Chinese side emphasized their substantial potential. They stressed that China-Australia relations are progressing positively and urged against any hesitation, deviation, or reversal in this forward momentum.
• During the FOMC Press Conference, Fed Chair Jerome Powell emphasized that although inflation is showing signs of moderation, the persistence of price growth remains a significant concern that the Fed cannot ignore.
• US Building Permits (MoM) increased to 1.518 million in February, against the expected 1.495 million and 1.489 million prior.
• US Housing Starts (MoM) rose to 1.521M from the previous figure of 1.374M, exceeding the market expectation of 1.425M in February.
• The preliminary US Michigan Consumer Sentiment Index for March decreased to 76.5, from the previous reading of 76.9. This decline comes in contrast to expectations of it remaining unchanged.

Technical Analysis: Australian Dollar advances to near 0.6620 followed by a major barrier

The Australian Dollar trades near 0.6620 on Thursday. Notably, a key resistance level stands at 0.6650, a significant marker for potential upward movement. A successful breakthrough above this level could provide momentum for the AUD/USD pair to revisit March's high, recorded at 0.6667 on March 8. On the downside, immediate support is observed at the 23.6% Fibonacci retracement level of 0.6614, followed by the psychological barrier of 0.6600. Should the pair breach below the latter, it may face further downward pressure, potentially navigating toward the region surrounding the 38.2% Fibonacci retracement at 0.6581 and the 14-day Exponential Moving Average (EMA) positioned at 0.6575.

AUD/USD: Daily Chart