- AUD/USD trades flat at 0.6375 as Australia posts a trade surplus of A$8 billion in July, missing estimates and sparking risk-off sentiment.
- US jobless claims of 216K beat estimates, reinforcing the Fed’s ‘higher for longer’ stance and putting downward pressure on AUD/USD.
- Traders eye upcoming economic indicators from Australia and the US, including Westpac Consumer Confidence and US inflation figures.
The Aussie Dollar (AUD) pared its losses versus the US Dollar (USD) on Thursday after US economic data showed the US Federal Reserve (Fed) work is far from done, while weakness in China’s exports weighed the market mood. At the time of writing, the AUD/USD is trading at 0.6375, flat as Friday’s Asian session commences.
The Aussie Dollar remains flat against the US Dollar as strong US jobless claims and China’s export slowdown create a mixed trading environment
Australia’s economic docket showed that Imports surpassed Exports, but still, it showed a surplus on its Trade Balance of A$8 billion in July. Although the data is encouraging, missed estimates. That, alongside a weaker improvement of China’s exports, spurred a risk-off impulse that carried on throughout the whole trading day, with Wall Street finishing with losses, except for the Dow Jones, witnessing decent gains of 0.22%.
Aside from this, US economic data revealed by the US Department of Labor reinforced the Federal Reserve’s need to hold rates higher for longer, as said by its Chairman Jerome Powell. Unemployment claims for the last week rose by 216K, below estimates, while Continuing Claims gave signals that conditions are tightening.
The data bolstered the US Dollar (USD), which, as shown by the US Dollar Index, printed gains of 0.20%, standing near yearly highs above 105.000. Therefore, the AUD/USD was downward pressure near the 0.6350s area.
Meanwhile, US Treasury bond yields retreated somewhat, as money market futures slashed bets the US Federal Reserve would continue to tighten monetary policy, past the current Federal Funds Rate (FFR) at 5.25%-5.50%, Odds for a 25 bps rate hike in November, are at 43.4%.
Recently, Federal Reserve officials have kept their options open regarding deciding the forward path of monetary policy. John Williams from the New York Fed said that policy is “restrictive” but refrained from commenting on his decision. Of late, Chicago’s Fed President Austan Goolsbee said the Fed could reach the “golden path” where inflation falls but recession is avoided.
AUD/USD traders should be attentive to next week’s data. The Australian economic docket would feature the Westpac Consumer Confidence, NAB Business Confidence, and employment data. On the US front, inflation figures, Retail Sales, Industrial Production, unemployment claims and Consumer Sentiment would shed some light regarding the Fed’s future decision.
AUD/USD Price Analysis: Technical outlook
The daily chart portrays the pair subdued at around the year lows of 0.6357, printing back-to-back sessions of spinning tops, suggesting that neither buyers nor sellers are in charge. However, the trend remains downward, and if the AUD/USD drops below 0.6357, expect a challenge of the 0.6300 figure. Once cleared, the major would test the November 22 low of 0.6272. On the flip side, upside risks emerge above the September 6 high of 0.6405, with the next resistance at the September 5 high at 0.6464.
Information on these pages contains forward-looking statements that involve risks and uncertainties. Markets and instruments profiled on this page are for informational purposes only and should not in any way come across as a recommendation to buy or sell in these assets. You should do your own thorough research before making any investment decisions. FXStreet does not in any way guarantee that this information is free from mistakes, errors, or material misstatements. It also does not guarantee that this information is of a timely nature. Investing in Open Markets involves a great deal of risk, including the loss of all or a portion of your investment, as well as emotional distress. All risks, losses and costs associated with investing, including total loss of principal, are your responsibility. The views and opinions expressed in this article are those of the authors and do not necessarily reflect the official policy or position of FXStreet nor its advertisers. The author will not be held responsible for information that is found at the end of links posted on this page.
If not otherwise explicitly mentioned in the body of the article, at the time of writing, the author has no position in any stock mentioned in this article and no business relationship with any company mentioned. The author has not received compensation for writing this article, other than from FXStreet.
FXStreet and the author do not provide personalized recommendations. The author makes no representations as to the accuracy, completeness, or suitability of this information. FXStreet and the author will not be liable for any errors, omissions or any losses, injuries or damages arising from this information and its display or use. Errors and omissions excepted.
The author and FXStreet are not registered investment advisors and nothing in this article is intended to be investment advice.
Recommended content
Editors’ Picks
AUD/USD trades around 0.6660 after another uneventful session
The AUD/USD pair remained away from investors’ radar and holds on to familiar levels in the 0.6660 region. Australian calendar has nothing to offer on Wednesday, but the RBNZ monetary policy decision may spur action.
EUR/USD lacks directional strength, hovers around 1.0850
The EUR/USD pair extended its consolidative phase for the second consecutive day as financial markets missed a clear catalyst. Attention flips to the FOMC Meeting Minutes scheduled for mid-Wednesday.
Gold steadies around $2,420 ahead of FOMC Minutes
Gold gained traction and climbed to $2,430 area in the American session, turning positive on the day. The pullback in the benchmark 10-year US Treasury bond yield helps XAU/USD stage a rebound following the sharp retreat seen from the all-time high set at the weekly opening at $2,450.
Ethereum could see new all-time high following Fidelity and Grayscale updates on ETF application
Ethereum (ETH) continued its rally on Tuesday following filings on the Securities & Exchange Commission's (SEC) website showing Fidelity and Grayscale filed an amended S-1 registration and initial 19b-4, respectively, for their spot ETH ETF products.
UK: Due in large part to the base effect, CPI is forecast down to 2.1% from 3.2%
Another handful of Fed speakers. As we saw yesterday, the latest stance is “not yet.” In the UK, tomorrow we get CPI. Due in large part to the base effect, CPI is forecast down to 2.1% from 3.2% and core, to 3.6% from 5.2%.