Australian Dollar moves sideways after trimming intraday gains, focus on US data
Australian Dollar moves sideways after trimming intraday gains. Aussie pair dipped post-release of the US headline inflation. Consumer Inflation Expectations raised the odds of RBA to increase interest rates. US Dollar advanced following the slew of upbeat US data, awaiting US Consumer Sentiment.
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The Australian Dollar trades around 0.6320, aligned to the major support level at 0.6300 lined up with a monthly low at 0.6285. The 23.6% Fibonacci retracement level at 0.6429 acts as strong resistance, followed by the 50-day Exponential Moving Average (EMA) at 0.6445 level. A clear breakthrough could pave the way for upward momentum, aiming at the psychological milestone of 0.6500.
The Australian Dollar (AUD) snaps a two-day losing streak post a slew of optimistic economic data from the United States (US) during the week. With US inflation surpassing expectations and initial jobless claims coming in lower than anticipated, discussions about the trajectory of the US Federal Reserve's (Fed) monetary policy have been reignited.
Australia has experienced a rise in consumer expectations regarding inflation, a trend likely influenced by an increase in oil prices. The upcoming focal points include the release of Meeting Minutes from the Reserve Bank of Australia (RBA) and employment data in the next week.
This downbeat Chinese inflation data has the potential to impact the Australian Dollar, considering Australia's significant role as a major exporter to China. Economic dynamics between these two countries often influence the performance of the Aussie Dollar, and the subdued inflation figures from China may contribute to undermining its strength.
The US Dollar Index (DXY) gained upward momentum after a robust release of US data. Nonetheless, on Friday, the US Dollar (USD) is trading marginally lower, influenced by a retreat in US Treasury yields following a recent surge. Market participants are expected to redirect their attention to the Michigan Consumer Sentiment Index set to be released on Friday.
Investors seem to factor in the possibility of another Fed rate hike. This is noteworthy given the recent mixed rhetoric from most Fed officials, emphasizing the necessity for the US central bank to maintain higher rates for an extended period, even without signaling a clear intention for another rate increase.
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