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30/10/24
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AUD Holds Steady Against USD Amid Mixed Economic Signals
The Australian Dollar has shown resilience against the US Dollar, buoyed by recent economic data that fell short of expectations. The Consumer Price Index (CPI) in Australia reported a modest year-over-year rise of 2.1% in September, below the anticipated 2.3% and a decrease from the previous month’s 2.7%. The third-quarter CPI growth of only 0.2% quarter-over-quarter further illustrated the easing inflation trend, compared to a rise of 1.0% in the prior quarter. The lower CPI figures may encourage the Reserve Bank of Australia (RBA) to maintain its current hawkish stance on monetary policy.
While the Australian Dollar (AUD) increased slightly, the US Dollar (USD) experienced a minor correction as Treasury yields dipped. The broader market continues to exhibit caution ahead of the US presidential election and vital economic data releases. Investors are particularly focused on the upcoming preliminary data on Gross Domestic Product (GDP) and October’s employment report, as these figures could provide insights into potential monetary policy shifts by the Federal Reserve.
Recent US economic indicators suggest resilience, supporting discussions around nominal interest rate cuts by the Federal Reserve. Current market indicators imply a high probability of a 25-basis-point rate cut in November, with minimal expectation for a more aggressive adjustment. The Fed’s recent labor market report indicated a decline in job openings, further complicating the economic landscape.
In Australia, inflation has moderated further, with the CPI falling to 2.8% year-over-year, marking the lowest level since early 2021. The RBA maintains that the current cash rate of 4.35% effectively supports employment while anchoring inflation within the target range. Consumer confidence has dipped slightly, reflecting persistent economic challenges.
Technical analysis of the AUD/USD pair reveals trading within a descending channel, currently around the 0.6560 level. The pair shows a bearish trend short-term but is approaching an oversold condition, suggesting potential upward corrections. Key support levels are noted at 0.6520 and 0.6500, while resistance appears at 0.6590 and 0.6600. A breakout above these levels could pave the way for further gains.
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