• Sun. Jul 14th, 2024

The Australian Dollar Stays Strong, and Markets Are Waiting for Important US Non-farm Payrolls Data in June

Leon Kramer

ByLeon Kramer

Jul 6, 2024
The Australian Dollar Stays Strong, and Markets Are Waiting for Important US Non-farm Payrolls Data in June

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  • Bulls continue to dominate the AUD/USD market as the Australian dollar remains resilient despite disappointing economic data from the United States.
  • The robust Retail Sales data from Australia in May continues to bolster the pair, although a weaker Trade Surplus may restrict the potential gains.
  • American traders are currently enjoying the festivities of Independence Day.

In comparison to the United States Dollar (USD), the Australian Dollar (AUD) maintained its strength, maintaining its position at levels that have yet to be seen since January. Even though the figures for Trade Surplus reported during the Asian session were disappointing, the United States Dollar (USD) continues to show weakness as a reaction to the unimpressive economic data released on Wednesday.

According to specific indicators, Australia’s economy is showing signs of fragility. Although this is the case, the Reserve Bank of Australia (RBA) has decided to delay any potential reductions in interest rates because of the ongoing problem of high inflation. Because it is one of the few central banks in the G10 countries that has the potential to begin lowering interest rates, this could prolong the gains of the Australian dollar at a time when markets are also considering raising interest rates.

AUD Shows Resilience Despite Underwhelming Trade Surplus Figures

  • According to the estimates provided by the Australian Bureau of Statistics on Thursday, the trade surplus in Australia for May was reported to be 5,773 million MoM. This figure was lower than the anticipated 6,678 million and a decrease from the previous reading of 6,548 million.
  • On a monthly basis, Australia’s exports of goods and services increased by 2.8%, which is a positive change in comparison to the decline of 2.5% that occurred in the previous month. The value of the Australian dollar receives some assistance as a result of this improvement.
  • According to the most recent minutes released by the Reserve Bank of Australia, there is a persistent recommendation to keep the policy rate at the same level as it is currently. Concerns about the unpredictability of consumption data and the apparent financial strain that a large number of households are experiencing are the primary factors that led to this decision.
  • Given the bank’s willingness to increase rates and Governor Bullock’s assurance that necessary measures will be taken to curb inflation, the Australian dollar could potentially continue to strengthen.
  • According to futures markets, the RBA’s August 6 meeting has a 25% chance of a rate hike, which increases to approximately 50% in subsequent meetings.
  • The Federal Reserve continues to see strong market expectations for a rate cut in September, with a 70% likelihood assigned to this anticipation.
  • The positive ADP report, decrease in jobless claims, and strong ISM Services PMIs have certainly increased the market’s optimism for a potential interest rate cut in September.

The AUD/USD Pair Maintains Its Robust Momentum, With a Positive Outlook for the Bulls

The Relative Strength Index (RSI) and the Moving Average Convergence Divergence (MACD) indicators are both comfortably positioned in positive territory, indicating that the AUD/USD pair is continuing to demonstrate strong momentum. The fact that it reached its highest point in January demonstrates a positive outlook.

On the front of resistance, the upcoming bullish targets are 0.6730 and 0.6750. A look ahead reveals that these are the targets. During this time, a number of different levels of support can be considered, including 0.6670, 0.6650, and 0.6630.

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Leon Kramer

Leon Kramer

Leon Kramer, a renowned financial author, enlightens Main Forex News readers with his deep understanding of currency markets. His years in global finance, combined with an intuitive grasp of trends, delivers insightful, up-to-the-minute foreign exchange analysis.

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