Australian dollar pares gains as us dollar holds firm on cautious Fed
Press Hub UCapital
Share:
The Australian Dollar (AUD) faced renewed downward pressure against the US Dollar (USD) on Monday, trading near 0.6470. Hawkish remarks from the Reserve Bank of Australia (RBA) have offered some support to the pair, but the strong USD, bolstered by resilient US economic data and cautious Federal Reserve comments, keeps the AUD/USD pair under pressure.
Risk aversion weighs on australian dollar
The Australian Dollar continues to struggle, impacted by increased global risk aversion and weaker-than-expected domestic data. Employment growth in October slowed, with only 15.9K jobs added, falling short of the forecasted 25.0K, although the unemployment rate held steady at 4.1% for the third consecutive month. Additionally, Consumer Inflation Expectations dropped to 3.8%, the lowest level since October 2021, reflecting subdued inflationary pressures.
China’s mixed economic performance further dampened the AUD. While Retail Sales rose 4.8% YoY in October, surpassing expectations, Industrial Production growth of 5.3% YoY missed forecasts, highlighting the uneven recovery in Australia’s largest trading partner.
Us dollar remains steady on strong data and fed remarks
The US Dollar maintains its strength, supported by recent hawkish comments from Federal Reserve officials. Fed Chair Jerome Powell downplayed the possibility of imminent rate cuts, emphasizing the resilience of the US economy, a robust labor market, and persistent inflation. Powell stated, “The economy is not sending any signals that we need to be in a hurry to lower rates.”
US economic data reinforced the Dollar’s appeal. The Retail Sales report showed a 0.4% MoM increase in October, exceeding the market consensus of 0.3%, while the NY Empire State Manufacturing Index surged to 31.2, a stark contrast to the anticipated decline of 0.7. These figures highlight strong consumer activity and manufacturing performance.
Technical analysis
key levels for aud/usd The AUD/USD pair remains in a short-term downtrend, with the 14-day RSI climbing from the oversold level near 30, hinting at waning selling pressure.
Support Levels: The 0.6400 level represents critical support, and a breach could intensify downward pressure, potentially driving the pair toward the yearly low of 0.6348.
Resistance Levels: Immediate resistance lies at the psychological threshold of 0.6500. A break above this level could target the nine-day EMA at 0.6514, followed by the 14-day EMA at 0.6542. Clearing these levels could pave the way for a retest of the three-week high at 0.6687.
The Australian Dollar faces significant challenges, balancing hawkish RBA commentary against a resilient US Dollar and global risk aversion. As the AUD/USD hovers near 0.6470, traders will closely monitor Tuesday's RBA meeting minutes and upcoming US economic data for further direction. Key technical levels at 0.6400 and 0.6500 will be pivotal in shaping the pair’s short-term trajectory.
Risk aversion weighs on australian dollar
The Australian Dollar continues to struggle, impacted by increased global risk aversion and weaker-than-expected domestic data. Employment growth in October slowed, with only 15.9K jobs added, falling short of the forecasted 25.0K, although the unemployment rate held steady at 4.1% for the third consecutive month. Additionally, Consumer Inflation Expectations dropped to 3.8%, the lowest level since October 2021, reflecting subdued inflationary pressures.
China’s mixed economic performance further dampened the AUD. While Retail Sales rose 4.8% YoY in October, surpassing expectations, Industrial Production growth of 5.3% YoY missed forecasts, highlighting the uneven recovery in Australia’s largest trading partner.
Us dollar remains steady on strong data and fed remarks
The US Dollar maintains its strength, supported by recent hawkish comments from Federal Reserve officials. Fed Chair Jerome Powell downplayed the possibility of imminent rate cuts, emphasizing the resilience of the US economy, a robust labor market, and persistent inflation. Powell stated, “The economy is not sending any signals that we need to be in a hurry to lower rates.”
US economic data reinforced the Dollar’s appeal. The Retail Sales report showed a 0.4% MoM increase in October, exceeding the market consensus of 0.3%, while the NY Empire State Manufacturing Index surged to 31.2, a stark contrast to the anticipated decline of 0.7. These figures highlight strong consumer activity and manufacturing performance.
Technical analysis
key levels for aud/usd The AUD/USD pair remains in a short-term downtrend, with the 14-day RSI climbing from the oversold level near 30, hinting at waning selling pressure.
Support Levels: The 0.6400 level represents critical support, and a breach could intensify downward pressure, potentially driving the pair toward the yearly low of 0.6348.
Resistance Levels: Immediate resistance lies at the psychological threshold of 0.6500. A break above this level could target the nine-day EMA at 0.6514, followed by the 14-day EMA at 0.6542. Clearing these levels could pave the way for a retest of the three-week high at 0.6687.
The Australian Dollar faces significant challenges, balancing hawkish RBA commentary against a resilient US Dollar and global risk aversion. As the AUD/USD hovers near 0.6470, traders will closely monitor Tuesday's RBA meeting minutes and upcoming US economic data for further direction. Key technical levels at 0.6400 and 0.6500 will be pivotal in shaping the pair’s short-term trajectory.