Australian Dollar moves back and forth, China’s Xi Jinping to meet with US executives

  • Australian Dollar moves back to the positive zone amid tepid US Dollar.
  • Australian equity market experiences gains; supporting the Aussie Dollar.
  • Bloomberg survey of economists finds the consensus expectation is for the PBoC to implement two additional RRR cuts in 2024.
  • Greenback struggles with the expectation of the Fed initiating a rate cut cycle starting in June.

The Australian Dollar (AUD) moves in an upward direction on Tuesday. However, the decline in the US Dollar (USD) helped to support the AUD/USD pair during the early Asian hours. The AUD faced slight downward pressure following the release of Australia’s Westpac Consumer Confidence data, which dipped 1.8% to 84.4 in March 2024 from February’s 86.0, easing from 20-month highs.

The Australian equity market found support from expectations of a rate cut, driven by a decline in the Aussie consumer confidence, contributing to the strength of the Australian Dollar. Despite modest weakness on Wall Street overnight, the ASX 200 Index extended its winning streak. Investors are anticipated to closely monitor the release of the Australian monthly Consumer Price Index (CPI) data on Wednesday.

The US Dollar Index (DXY) experienced a second consecutive day of losses, largely attributed to declining US Treasury yields. Market sentiment is leaning towards expectations of the Federal Reserve (Fed) commencing an easing cycle, with speculations pointing towards a potential start in June.

Daily Digest Market Movers: Australian Dollar gains ground on stronger ASX 200

  • Australia’s government has pledged to support a minimum wage increase aligned with inflation this year, recognizing the ongoing challenges faced by low-income families amid rising living costs.
  • According to a Bloomberg survey of economists, the consensus expectation is for the People’s Bank of China (PBoC) to implement two additional Reserve Requirement Ratio (RRR) cuts in 2024, amounting to a total reduction of 50 basis points.
  • Chinese President Xi Jinping is set to meet with American business leaders in Beijing on Wednesday, following up on his November dinner with US investors in San Francisco. The meeting was initiated by Evan Greenberg, the chief executive of US insurer Chubb. Among the attendees are Stephen Orlins, president of the National Committee on US-China Relations, and Craig Allen, president of the US-China Business Council.
  • Atlanta Fed President Raphael Bostic expressed his expectation for just one rate cut this year, cautioning that reducing rates prematurely could lead to greater disruption.
  • Chicago Fed President Austan Goolsbee aligns with the majority of the board, anticipating three cuts. However, Goolsbee mentioned the necessity for further evidence indicating a decrease in inflation before proceeding with rate cuts.
  • US New Home Sales Change declined by 0.3% month-over-month, compared to the previous rise of 1.7%.
  • US New Home Sales (MoM) came in at 0.662M, which is below the expected 0.680M in February and 0.664M prior.
  • S&P Global Services PMI showed a slight decrease in March, dropping to 51.7 from 52.3. The expected reading was 52.0. Manufacturing PMI rose to 52.5 against the expected 51.7 and 52.2 prior. Composite PMI showed a slight dip to 52.2 from 52.5 prior.
  • Initial Jobless Claims for the week ending on March 15 came in at 210K, below the 215K expected and 212K prior.

Technical Analysis: Australian Dollar moves back to the major level of 0.6550

The Australian Dollar traded near 0.6550 on Tuesday. If it surpasses this level, it could encounter immediate resistance around the major barrier of 0.6550, in conjunction with the nine-day Exponential Moving Average (EMA) at 0.6554. A successful breakthrough above this level might propel the AUD/USD pair to test the 38.2% Fibonacci retracement level at 0.6565. On the downside, if the price retreats, a significant support level lies at the psychological mark of 0.6500, followed by March’s low at 0.6477.

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