The Australian Dollar (AUD) sustained its upward trajectory for the second consecutive session on Thursday, buoyed by encouraging employment data from Australia. Meanwhile, the US Dollar (USD) experienced notable depreciation following the Federal Open Market Committee’s (FOMC) decision to maintain interest rates at 5.5% during Wednesday’s policy meeting. This decision, coupled with dovish remarks from US Federal Reserve (Fed) Chair Jerome Powell, lent support to the AUD/USD pair.
In the Australian equity market, intraday gains were relinquished as the market slipped into negative territory, potentially tempering the AUD’s ascent. However, earlier in the trading day, the ASX 200 Index surged by nearly 1.0%, mirroring a rally on Wall Street from the previous session.
The US Dollar Index (DXY) displayed a gap down on Thursday following its significant decline in the preceding session. Weaker US Treasury yields contributed to the Greenback’s losses, likely influenced by the Fed’s reaffirmation of expectations for three interest rate cuts in 2024.
Key Market Movements:
Australian Employment Change for February surged to 116.5K, surpassing expectations and the previous figure.
Australia’s Unemployment Rate increased by 3.7%, lower than anticipated and the previous rate.
The preliminary Judo Bank Services PMI rose, indicating positive momentum in the sector.
Judo Bank Composite PMI also showed a slight increase.
People’s Bank of China (PBoC) maintained its interest rate at 3.45%.
Chinese Foreign Minister Wang Yi met with Australia’s Foreign Affairs Minister Penny Wong, emphasizing positive progress in bilateral relations.
During the FOMC Press Conference, Fed Chair Jerome Powell highlighted concerns about persistent inflation despite signs of moderation.
US Building Permits and Housing Starts for February exceeded market expectations.
The preliminary US Michigan Consumer Sentiment Index for March declined slightly.
Technical Analysis:
The AUD advanced near 0.6620, with a notable resistance level at 0.6650. A successful breach above this level could signal further upward momentum toward March’s high at 0.6667. On the downside, immediate support is seen at the 23.6% Fibonacci retracement level of 0.6614, followed by the psychological barrier of 0.6600. Further downside movement may target the region around the 38.2% Fibonacci retracement at 0.6581 and the 14-day Exponential Moving Average (EMA) at 0.6575.
