Key Points
- The intraday direction for AUD/USD remains negative amid a stable US dollar and improved US Treasury yields.
- Anticipation builds around key Australian data releases: Services PMI and Q4 GDP.
- Recent Australian economic indicators present a mixed picture, with inflation rates and building permits indicating potential policy adjustments.
- The Reserve Bank of Australia (RBA) might consider interest rate cuts, reflecting on the latest economic data.
- Technical analysis reveals immediate resistance and support levels, guiding potential future movements.
As of the latest Monday report, the AUD/USD exchange rate has shown a negative intraday direction. This movement is influenced by several key factors, including a stable US dollar, an increase in US Treasury yields, and a decline in the ASX 200 index. These factors collectively contribute to the current market sentiment and the direction of the AUD/USD pair.
Key Australian Data: Services PMI & Q4 GDP
Investors are keenly awaiting the release of significant Australian economic data. Notably, the Services PMI for February and the fourth quarter GDP of 2023 are anticipated on Tuesday and Wednesday, respectively. These releases are crucial for assessing the health of the Australian economy and its future trajectory.
Mixed Signals: Inflation at 4.0%, Permits Fall
Recent data from the Melbourne Institute shows a year-over-year inflation increase of 4.0% for February, down from the previous 4.6%. Building permits for January showed a decline of 1.0%, contrary to market expectations of a 4.0% rise, though this represented an improvement from the previous decrease of 10.1%. The Consumer Price Index (CPI) for January rose by 3.4%, slightly below the consensus of 3.5%. These figures provide insight into Australia’s current economic climate and may influence future policy decisions by the Reserve Bank of Australia (RBA).
RBA Eyes Rate Cuts Amid Economic Data
The RBA may consider interest rate cuts later this year, influenced by the latest economic indicators. Such a move would stimulate economic activity by making borrowing more affordable, in light of the presented data suggesting a slowing inflation rate and mixed economic performance.
AUD/USD Technicals: Resistance at 0.6537
The AUD/USD pair currently trades around 0.6520. The 21-day EMA (0.6537), the 23.6% Fibonacci retracement (0.6543), and a major level at 0.6550 immediately offer resistance. Breaking above these resistance levels could aim for a psychological level of 0.6600. Conversely, the pair finds key support at the psychological level of 0.6500 and last week’s low at 0.6486, with potential breaks aiming for the major support level of 0.6450 and February’s low at 0.6442.
