AUD/USD Forecast and News
AUD/USD now shifts its focus to 0.6700
AUD/USD advanced for the third consecutive session on Wednesday, reaching four-month highs in levels shy of the 0.6700 hurdle ahead of the release of the key labour market report in Australia on Thursday.
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AUD/USD Technical Overview
Extra gains might push the AUD/USD to initially test the round level of 0.6700 prior to the December 2023 peak of 0.6871 and the July 2023 high of 0.6894 (July 14), all ahead of the key 0.7000 yardstick.
Meanwhile, if bears retake control, there is some short-term resistance at the 100-day and 55-day SMAs of 0.6569 and 0.6545, respectively, before the more critical 200-day SMA of 0.6521, all before falling to the May low of 0.6465 and the 2024 bottom of 0.6362 (April 19).
Looking at the big picture, more gains are on the table as long as spot trades remain above the 200-day SMA.
On the four-hour chart, the buying momentum appears to be regaining strength. However, early resistance forms around 0.6700 before 0.6871. On the downside, 0.6571 is an immediate support level, just ahead of the 200-SMA of 0.6536. The RSI climbed to around 80.
Fundamental Overview
Continued downward pressure on the US Dollar (USD) added to the recovery in risk-associated assets, driving AUD/USD to the boundaries of the key 0.6700 the figure, or four-month tops on Wednesday.
Furthermore, the USD added to the ongoing bearish sentiment after US inflation data tracked by the Consumer Price Index (CPI) showed another downtick in April, bolstering investors’ view of the potential start of the Fed’s easing programme at some point in the second half of the year.
The latter was also propped up by the drop to multi-week lows in US yields across the curve.
The lower US CPI prints added to Chief Jerome Powell's remarks earlier in the week, when he ruled out a rate hike at the time when he expressed expectations for inflation to remain subdued this year.
Domestically, the Aussie dollar met extra support from a new high in copper prices vs. some side-lined trading in iron ore prices midweek.
In terms of monetary policy, the Reserve Bank of Australia (RBA) chose to maintain its interest rate at 4.35% during its May 7 meeting, reiterating its neutral policy stance and signalling flexibility. The RBA updated its economic projections, foreseeing elevated inflation rates until Q2 2025, primarily driven by ongoing service price inflation. However, the bank anticipates inflation to eventually return to the target range of 2%–3% by the latter part of 2025, reaching the midpoint by 2026.
During the subsequent press briefing, Governor Michele Bullock maintained a balanced perspective, hinting at potential rate adjustments at the current meeting, stating, "We might have to raise, we might not."
Presently, the swaps market has largely discounted the likelihood of further rate hikes in the next six months, with expectations of a decline in the subsequent six months.
Moreover, both the RBA and the Federal Reserve are expected to implement their easing measures later than many of their other G10 counterparts.
Considering the Fed's commitment to monetary policy tightening and the potential for RBA easing later in the year, sustained upward movements in AUD/USD are expected to face constraints.
On the domestic calendar, the Wage Price Index rose by 4.1% YoY in the January–March period.
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
AUD/USD Bearish Themes
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Editors' picks
EUR/USD looks bid and retargets 1.0900
The strong CPI-driven pullback in the Greenback allowed EUR/USD to maintain its multi-session rebound well in place, approaching the key 1.0900 region on Wednesday.
GBP/USD keeps the bid bias near 1.2700
GBP/USD extended its march north and climbed to fresh five-week tops in the boundaries of 1.2700 the figure, always on the back of the increasing selling pressure hurting the US Dollar post-US CPI.
USD/JPY slips back to 155.00 as Greenback weakens following soft US CPI inflation
The USD/JPY pair trades in positive territory for the fourth consecutive day near 156.55 on Wednesday during the Asian session. The uptick of the pair is bolstered by the speculation that the Federal Reserve might maintain rates higher for longer amid the elevated inflation.
Gold reaches fresh monthly highs, aims for $2,400
Gold trades modestly higher on the day above $2,360 in the American session. The data from the US showed that annual inflation edged lower to 3.4% in April as expected. The benchmark 10-year US Treasury bond yield stays in the red below 4.4%, allowing XAU/USD to keep its footing.
Oil sinks while the Greenback retreats on softer CPI print
Oil breaks below $78.00 after both OPEC and IEA released their monthly reports. While OPEC stuck to previous expectations, sluggish demand is forecasted in the IEA release. The US Dollar Index eases ahead of the US CPI print.
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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).