- AUD/USD is favored by improving risk sentiment and a nearly empty US economic calendar.
- Wall Street opens higher, influencing currencies despite a slight rise in the US Dollar Index.
- Upcoming Australian employment data could influence AUD strength as forecasts point to modest employment growth.
The Australian Dollar makes a 180-degree turn and rises against the US Dollar in early trading of the North American session, gaining 0.33% amid improving risk appetite. The short economic calendar in the United States and the hawkish comments of the President of the Federal Reserve, Jerome Powell, failed to boost the Dollar. The AUD/USD pair is trading at 0.6423.
AUD/USD advances despite Fed's hawkish comments; focus turns to Australian employment data
Wall Street sets the tone and opens with gains. US Treasury yields fall, but do not undermine the Dollar, which remains firm, as shown by the US Dollar Index (DXY). The DXY rises 0.11% to 106.24.
US data released during the week showed that US consumers remain resilient, while industrial production remains firm. On the negative front, building permits and housing starts fell due to rising mortgage rates. The Mortgage Bankers Association (MBA) revealed that 30-year mortgage rates rose from 7.01% to 7.13%.
In addition to the data, Fed Chairman Jerome Powell said that the lack of progress on inflation would likely force rates to be kept stable “for as long as necessary.” Markets perceived Powell as a hawk, although Wednesday's price action suggests otherwise.
In December 2023, the Fed revealed in its projections that most officials expected to cut rates three times due to the evolution of the disinflation process. However, three months of higher-than-expected inflation via the Consumer Price Index (CPI) prompted Powell's tilt and a repricing of fewer rate cuts than anticipated.
On the Australian front, I would highlight the publication of employment data. The change in employment is expected to add 7.2 thousand jobs to the active population, well below the 116.5 thousand created in February, while the unemployment rate is expected to approach 4%. If the data is weak, more accommodative policy by the Reserve Bank of Australia would be warranted. Therefore, AUD/USD traders could push the pair lower.
AUD/USD Price Analysis: Technical Outlook
Despite the recovery, the AUD/USD pair has a bearish bias, and would require buyers to achieve a daily close above the February 13 low at 0.6442. Otherwise, the pair's first support would be 0.6400, followed by the April 16 daily low at 0.6389. The next support would be 0.6350, followed by 0.6300.
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.
