- AUD/USD struggles for firm intraday direction amid mixed fundamental signals.
- Optimism over China’s stimulus measures lends some support to the AUD.
- Modest USD strength caps spot prices ahead of US PCE Price Index
The AUD/USD pair oscillates within a tight range below the 0.6900 mark during the first half of the European session on Friday and remains close to its highest level since February 2023, reached earlier this week.
The US Dollar (USD) attracts some buyers ahead of the US Personal Consumption Expenditure (PCE) Price Index and turns out to be a key factor acting as a headwind for the AUD/USD pair. That said, bets on another large interest rate cut by the Federal Reserve (Fed) in November are holding back USD bulls from opening aggressive positions. In addition to this, market optimism limits the safe-haven USD and lends some support to the risk-sensitive AUD.
Global risk sentiment gets a further boost after the People’s Bank of China (PBOC) cut the seven-day repo rate to 1.5% from 1.7% and reduced the reserve requirement ratio (RRR) by 50 basic points. This comes on top of a series of stimulus measures announced this week, which continue to fuel the risk-on rally in global equity markets and benefit the Australian Dollar (AUD), China’s proxy, amid the hawkish stance of the Reserve Bank of Australia (RBA).
Indeed, the Australian central bank reiterated on Tuesday that policy will need to be tight until confidence is restored that inflation is moving sustainably towards the target range. In addition to this, RBA Governor Michele Bullock stated that recent data has not significantly influenced the policy outlook. This, in turn, suggests that the path of least resistance for the AUD/USD pair is to the upside and supports the prospects of an extension of the rally beyond two weeks.
Economic indicator
Personal consumption expenditure – price index (YoY)
Personal consumption expenditure published by the Bureau of Economic Analysis, Department of Commerce It is an estimate of the amount of money consumers spend in a month. It is a significant indicator of inflation. A result above expectations is bullish for the dollar, while a reading below consensus is bearish.
Next post:
Fri Sep 27, 2024 12:30
Frequency:
Monthly
Dear:
23%
Previous:
2.5%
Fountain:
US Bureau of Economic Analysis
Source: Fx Street
I am Joshua Winder, a senior-level journalist and editor at World Stock Market. I specialize in covering news related to the stock market and economic trends. With more than 8 years of experience in this field, I have become an expert in financial reporting.
