• The Australian Currency halts its winning streak on Tuesday and improved US Dollar.
• Australia’s ASX 200 index moves lower and weighs on the Aussie Dollar.
• PBoC maintains its one-year LPR at 3.45% but reduces the five-year LPR by 25 basis points.
• Greenback gains ground on higher US Treasury yields.

Tuesday saw the Australian Dollar (AUD) end a four-day winning streak against the strengthening US Dollar (USD). The Greenback is supported by higher US Treasury yields, which puts pressure on the AUD/USD pair. A lower Aussie money market also put negative pressure on the AUD. The mining and energy firms in the S&P/ASX 200 index saw a decline, indicating a decrease in commodity prices.

Australian Dollar refrains from responding to the minutes of the February monetary policy meeting released by the Reserve Bank of Australia (RBA). The RBA Board deliberated on whether to raise rates by 25 basis points (bps) or keep them the same. It was mentioned that it would “take some time” before the board could be sufficiently confident about inflation, even while data gave them greater confidence that inflation would return to target within a fair amount of time. As a result, the board decided it was reasonable to leave open the possibility of another rate increase.

As the market resumes trading following a long weekend due to holidays, the US Dollar Index (DXY) is gradually rising as investors eagerly await the release of the US Federal Open Market Committee (FOMC) Minutes on Wednesday. According to ANZ, rate cuts by the Federal Reserve (Fed) are expected to start in July 2024. The CME Fed Watch Tool indicates that there is roughly a 53% chance that the US Fed will decrease interest rates by 25 basis points at its June meeting.

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Australian dollar weakens versus stronger US dollar in the daily digest market mover

• This week’s ANZ-Roy Morgan Consumer Confidence increased to 82.8 from 82.6 last week. Notably, the index has now fallen below the 85-point barrier for a record-breaking 55 weeks running.
• Westpac anticipates a robust Australian economy, driven by low unemployment and strong balance sheets in the corporate sector. According to Westpac, the Reserve Bank of Australia will stick to its present monetary policy course until 2024 and then take a less stringent stance in 2025.
• The one-year Loan Prime Rate (LPR) of 3.45% will remain at that level, as established by the People’s Bank of China (PBoC). Furthermore, the five-year LPR was lowered by 25 basis points from 4.20% to 3.95% by the PBoC.
• Li Qiang, the premier of the People’s Republic of China, underlined the significance of upholding dependable and consistent policies. The rate on the Medium-term Lending Facility (MLF) was decided to remain at 2.5% by the PBoC.
• The Fed funds futures market is pricing in rate cuts of about 89 basis points, while the Federal Reserve’s dot plot for this year suggests an estimate of 75 basis points.
• Three rate cuts are an acceptable baseline for 2024, according to San Francisco Federal Reserve President Mary C. Daly, who made this statement at the Annual National Association for Business Economics (NABE) Policy Conference. Daly stressed that it’s too soon to think about letting the economy function unhindered.
• James Bullard, president of the Federal Reserve (Fed) in St. Louis, suggested at the NABE conference that the Fed should think about cutting interest rates at its meeting in March in order to prevent higher rates from slowing down economic activity.
• Although it was less than the predicted reading of 80.0, the preliminary Michigan Consumer Sentiment Index increased to 79.6 from 79.0 before.
• January saw a 2% increase in the US Core Producer Price Index (YoY), beyond the 1.6% and 1.7% forecasts the previous month. In contrast to the anticipated 0.1% improvement from the prior decrease of 0.1%, the MoM data revealed a growth of 0.5%.
• The US Producer Price Index increased by 0.9% year over year, as opposed to the 1.0% growth that was previously predicted and 0.6%. In the meantime, the monthly improvement was 0.3% as opposed to the prior 0.1% loss.
• The number of US building permits (MoM) fell to 1.470 million in January, compared to the anticipated increase of 1.509 million from 1.493 million.

Technical Analysis: The Australian dollar is trading above the nine-day EMA’s support level at 0.6530.

Tuesday’s trading for the Australian dollar is close to 0.6530, above the psychological support level of 0.6500, and the immediate support around the nine-day Exponential Moving Average (EMA) is at 0.6523. The significant milestone of 0.6550 and the critical resistance zone surrounding the 23.6% Fibonacci retracement at 0.6543 might be reached by the AUD/USD pair on the upswing. Before reaching the 38.2% Fibonacci retracement level of 0.6606, the AUD/USD pair may touch the psychological barrier of 0.6600 if a breakthrough is made above this zone.

Australian Currency price today

The Australian dollar’s (AUD) percentage change against the main currencies listed today is displayed in the table below. In relation to the US dollar, the Australian dollar was the weakest.

The major currencies’ percentage movements relative to one another are displayed on the heat map. The quotation currency is selected from the top row, and the base currency is selected from the left column. For example, the percentage change shown in the box will indicate EUR (base)/JPY (quote) if you select the Euro from the left column and proceed along the horizontal line to the Japanese Yen.

Conclusion

The Australian Dollar’s ability to weather the storm of a stronger US Dollar showcases its unique position in the global currency market. By staying informed on the interplay of market forces, adopting prudent trading strategies, and seeking expert opinions, forex traders and financial analysts can take advantage of the opportunities presented by these nuanced currency dynamics. It’s a call to action for all market enthusiasts to engage in thoughtful analysis and astute decision-making when it comes to their currency exchange endeavors.