As the Asian session kicks off on Friday, the Australian Dollar finds itself on the back foot against the US Dollar, following a 0.21% decline on Thursday. The downward pressure on the antipodean currency was driven by remarks from Federal Reserve officials indicating a cautious approach to monetary policy. At the time of reporting, the AUD/USD pair trades at 0.6419.
The AUD/USD pair experienced a slump in response to comments from Atlanta Fed President Raphael Bostic, who adopted a hawkish stance by questioning the necessity for rate cuts later in the year. His counterpart, New York Fed President John Williams, echoed sentiments of policy patience, suggesting the current stance remains appropriate and indicating a readiness to raise rates if required.
Wall Street mirrored the cautious sentiment, closing in the red. The market sentiment was further influenced by upbeat US data, with the Philadelphia Fed Manufacturing Index surpassing expectations, indicating robust manufacturing activity. Meanwhile, Initial Jobless Claims remained unchanged, and Continuing Claims edged up, both figures aligning with market forecasts.
Investor expectations reflected confidence in the US economic outlook, with projections indicating a Federal funds rate (FFR) of 5.07% by the end of the year, based on data from the Chicago Board of Trade (CBOT). Conversely, the Australian jobs data for March disappointed, with a decline of 6.6K jobs and a slight uptick in the unemployment rate to 3.8%, potentially signaling a stronger labor market than anticipated by the Reserve Bank of Australia (RBA).
Looking at the technical outlook for the AUD/USD pair, a bearish shift has been observed following a breach of the previous year-to-date low of 0.6442 on February 13. Further downside is expected, contingent on sellers breaking below the 0.6400 support level. Subsequent support levels include the November 10, 2023, daily low of 0.6338, followed by a significant cycle low at 0.6270. Conversely, buyers would need to drive prices above the 0.6500 level to sustain optimism for higher price levels.
