The Australian Dollar (AUD) is rebounding from recent losses, showing resilience despite the release of softer-than-expected Australian consumer inflation data on Wednesday. The AUD/USD pair, which experienced losses in the previous session amid an improved US Dollar (USD) on risk-off sentiment, is navigating through mixed economic indicators.
Australia’s Monthly Consumer Price Index (YoY) for November came in at 4.3%, slightly below market expectations of 4.4% and a marginal reduction from the previous figure of 4.9%. This hints at a modest easing in year-on-year inflationary pressures in the country.
Despite this, positive trends in Aussie Retail Sales (MoM) and Building Permits signal increased consumer spending and resilience in the domestic economy. Tuesday’s rise in retail sales and growth in monthly building permits defy expectations of a decline, painting a mixed picture.
Looking ahead, Thursday’s release of Australian Trade Balance data for December is anticipated to show an increase, possibly from 7,129 million to 7,500 million. A higher trade balance could signify improved export performance, contributing positively to Australia’s economic outlook.
The US Dollar Index (DXY) is displaying sideways movement, having experienced gains despite weaker US Treasury yields on Tuesday. The risk-on sentiment stemming from Federal Reserve members’ remarks speculating interest rate cuts by the end of 2024 may have tempered the USD’s profits.
Traders are now awaiting the release of the US Consumer Price Index (CPI) data for December on Thursday, a crucial economic indicator that could significantly impact market expectations regarding the Fed‘s monetary policy stance.
In terms of technical analysis, the Australian Dollar is hovering near the 0.6690 level, slightly below the psychological resistance of 0.6700 and the seven-day Exponential Moving Average (EMA) of 0.6724. A break above the latter could target the major level at 0.6750. Conversely, support is found at 0.6650 and the 38.2% Fibonacci retracement level at 0.6637, with further downside potential towards the psychological level at 0.6600. The AUD/USD pair’s movements are closely tied to economic data releases and the broader market sentiment.