AUD/USD Forecast and News
AUD/USD pulls back due to an upward correction in the US Dollar
AUD/USD is retracing its recent gains on Friday, following a rally on Thursday. The rally was propelled by a decline in the US Dollar as weak US Initial Jobless Claims indicated a more dovish outlook for the Federal Reserve. This helped offset pressure on the pair resulting from the RBA's less hawkish stance.
Latest Australian Dollar News
AUD/USD Technical Overview
Extra gains may cause the AUD/USD to revisit its May high of 0.6647 (May 3), which is slightly below the March top of 0.6667 (March 8) and comes ahead of the December 2023 peak of 0.6871.
Meanwhile, if bears regain the initiative, the pair may test the key 200-day SMA at 0.6519 before dropping to the May low of 0.6465 and the 2024 bottom of 0.6362 (April 19).
Looking at the larger picture, as long as spot trades above the 200-day SMA, more gains should be coming.
On the four-hour chart, the buying momentum looks to have regained traction. That said, initial resistance comes at 0.6647 prior to 0.6667. On the downside, immediate support comes at 0.6557 ahead of the 200-SMA at 0.6524 and the 100-SMA at 0.6519. Additionally, the RSI rebounded to approximately 58.
Fundamental Overview
Fresh selling pressure in the US Dollar (USD) bolstered the recovery in the risk-associated universe, encouraging AUD/USD to reclaim the area beyond 0.6600 the figure on Thursday.
Meanwhile, the USD halted its upside impetus following discouraging weekly results from the labour market, while declining US yields also collaborated with the corrective decline, all against the backdrop of an economic landscape consistent with the expected initiation of the Fed's easing program before the end of the year, likely around September.
Additionally, the Australian dollar managed to bypass a marginal advance in copper prices vs. a marked pullback in iron ore prices, which continued to retreat after recent peaks near the $120.00 zone per tonne.
Shifting focus to domestic developments, it's important to note that the Reserve Bank of Australia (RBA) opted to keep its interest rate unchanged at 4.35% during its early Tuesday event. Furthermore, the bank reiterated its neutral policy stance, stating that "the Board is not ruling anything in or out." The RBA updated its macroeconomic projections, forecasting higher headline and trimmed mean inflation rates up to Q2 2025, primarily driven by ongoing service price inflation. However, the bank expects inflation to return to the 2%–3% target range in the latter half of 2025 and reach the midpoint by 2026.
During the subsequent press conference, Governor Michele Bullock maintained a balanced stance. Regarding interest rates, she noted that "we might have to raise, we might not," indicating the board's consideration of rate hikes at the current meeting.
At present, the swaps market has largely discounted the possibility of further rate hikes over the next six months, with a decrease priced in for the subsequent six months.
Additionally, both the RBA and the Federal Reserve are anticipated to initiate their easing measures later than many of their G10 counterparts.
Given the Fed's commitment to tightening monetary policy and the potential for RBA easing later this year, sustained gains in AUD/USD are expected to be limited.
SPECIAL WEEKLY FORECAST
Interested in weekly AUD/USD forecasts? Our experts make weekly updates forecasting the next possible moves of the Australian Dollar-US Dollar pair. Here you can find the most recent forecast by our market experts:
AUD/USD: Interim top confirmed, 0.7000 at risk Premium
The AUD/USD pair kept falling in the last few days, reaching a fresh multi-week low of 0.7263 on Friday, to close the trading week a handful of pips above it.
AUD/USD Big Picture
AUD/USD Bullish Themes
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Latest AUD Analysis
Editors' picks
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GBP/USD alternates gains with losses around the 1.2500 neighbourhood amidst extra weakness in the Dollar, while market participants continue to digest the BoE event.
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AUD/USD YEARLY FORECAST
How could AUD/USD move this year? Our experts make an AUD/USD update forecasting the possible moves of the Aussie-US Dollar pair during the whole year. Don't miss our 2024 AUD/USD forecast!
AUD/USD FORECAST 2024
The Australian Dollar (AUD) started 2023 on a high note, though slumped closer to its post-pandemic low against the USD during the latter part of the year. The currency clawed back some of its steep declines during the final two months of 2023, and the outlook seems sunnier in the wake of the prevalent bearish sentiment surrounding the Greenback. Read more details about the forecast.
MOST INFLUENTIAL POLITICAL EVENTS IN 2024 FOR AUD/USD
Will the Fed will achieve a soft landing? The current market pricing for a more aggressive policy easing by the central bank next year might have already set the stage for a disappointment and favours the USD bulls. This should allow the USD to resume the prior uptrend witnessed since July 2023 and keep a lid on a runaway rally for the AUD/USD pair.
The upcoming US Presidential election could also play a key role in influencing the USD price dynamics and driving the aussie.
About AUD/USD
AUD/USD, The 'Aussie'
The AUD/USD pair, also called the “Aussie”, tells the trader how many US dollars (the quote currency) are needed to purchase one Australian dollar (the base currency). This currency pair is also known as the "Aussie". Together with the New Zealand Dollar and the Canadian Dollar, the AUD is a commodity currency, that is a currency whose country's exports are largely comprised of raw materials (precious metals, oil, agriculture, etc.).
The interest rates set by the Reserve Bank of Australia (RBA) have been among the highest of industrialized countries and the relatively high liquidity of the AUD has made it an attractive tool for carry traders looking for a currency with the highest yields. These factors made the AUD very popular among currency traders.
AUD/USD CORRELATIONS
Australia is a big exporter to China and its economy and currency reflect any change in the situation in that country. The prevailing view is that the Australian Dollar offers diversification benefits in a portfolio containing the major world currencies because of its greater exposure to Asian economies.
This correlation with the Shanghai stock exchange is to be added to the correlation it has with gold. The pair AUD/USD often rises and falls along with the price of gold. In the financial world, gold is viewed as a safe haven against inflation and it is one of the most traded commodities.
ORGANIZATIONS, PEOPLE AND ECONOMIC DATA THAT INFLUENCE AUD/USD
The AUD/USD news can be seriously affected by the decisions taken by these organizations and people:
- Reserve Bank of Australia (RBA) that issues statements and decides on the interest rates of the country. Its president is Michele Bullock.
- Australian Government and its Department of Finance that implement policies that affect the economy of the country.
- The US Government: events as administration statements, new laws and regulations or fiscal policy can increase or decrease the value of the US Dollar and the currencies traded against it, in this case, the Australian Dollar.
- Fed, the Federal Reserve of the United States whose president is Jerome Powell. The Fed controls the monetary policy, through active duties such as managing interest rates, setting the reserve requirement, and acting as a lender of last resort to the banking sector during times of bank insolvency or financial crisis.
In terms of economic data, as for most currencies, the AUDUSD traders have to keep an eye on:
- GDP (Gross Domestic Product), the total market value of all final goods and services produced in a country. It is a gross measure of market activity because it indicates the pace at which a country's economy is growing or decreasing. Generally speaking, a high reading or a better than expected number is seen as positive for the AUD, while a low reading is negative.
- Inflation measured by key indicators as the CPI (Core Price Index) and the PPI (Production Price Index), which reflect changes in purchasing trends.
- Current Trade Balance, a balance between exports and imports of total goods and services. A positive value shows trade surplus, while a negative value shows trade deficit. If a steady demand in exchange for AUD exports is seen, that would turn into a positive growth in the trade balance, and that should be positive for the AUD.
Michele Bullock
Michele Bullock is an Australian economist who is currently governor of the Reserve Bank of Australia. She commenced as governor on 18 September 2023, and is the first woman to hold the role. She is Chair of the Reserve Bank Board, Payments System Board and Council of Financial Regulators. Prior to her current role, Ms Bullock was the Deputy Governor of the Reserve Bank of Australia.
Michele Bullock RBA's Profile and Wikipedia
Jerome Powell
Jerome Powell took office as chairman of the Board of Governors of the Federal Reserve System in February 2018, for a four-year term ending in February 2022. His term as a member of the Board of Governors will expire January 31, 2028. Born in Washington D.C., he received a bachelor’s degree in politics from Princeton University in 1975 and earned a law degree from Georgetown University in 1979. Powell served as an assistant secretary and as undersecretary of the Treasury under President George H.W. Bush. He also worked as a lawyer and investment banker in New York City. From 1997 through 2005, Powell was a partner at The Carlyle Group.
Jerome Powell Fed's Profile and Wikipedia
RBA NEWS & ANALYSIS
FED NEWS & ANALYSIS
ASSETS THAT INFLUENCE AUD/USD THE MOST
- Currencies: NZD and JPY (New Zealand and Japan are important regional partners of Australia). Other important group of influent pairs includes: EUR/USD, GBP/USD, USD/JPY, USD/CHF, NZD/USD and USD/CAD.
- Commodities: The most important is Gold, as already explained above, but also Iron Ore and Natural Gas.
- Bonds: GACGB10 (Australian Government Bonds Generic Yield 10 Year), GNZGB10 (New Zealand Government Bond 10 Year) and T-NOTE 10Y (10 year US Treasury note).
- Indices: S&P/ASX 200 (stocks of the Australian Securities Exchange), S&P/TSX Global Gold Index (includes producers of gold and related products at the Toronto Stock Exchange).