• The Australian Dollar continues to decline as the country’s CPI came in lower than anticipated.
• The Monthly Consumer Price Index (YoY) for Australia increased by 3.4%, a little less than the predicted 3.5%.
• Aversion to risk propels the US dollar ahead of personal consumption expenditures.

On Wednesday, the Australian Dollar (AUD) continued to decline for the second straight session. The Reserve Bank of Australia (RBA) may decide to adopt a dovish position on the trajectory of interest rates in response to lower-than-expected Australian consumer prices, which causes the AUD/USD pair to decline. This view is pressured lower on the AUD.

In February, Australia’s Monthly Consumer Price Index (YoY) increased by 3.4%, which was a little less than the predicted 3.5% increase but in line with prior levels. Nevertheless, the most recent reading was the lowest since November 2021. Following the announcement of Westpac Consumer Confidence on Tuesday, which decreased 1.8% to 84.4 in March 2024 from February’s 86.0, falling from 20-month highs, the AUD has been under pressure to decline.

Due to a risk-off attitude and the impending release of US Personal Consumption Expenditures (PCE) on Friday, the US Dollar Index (DXY) recorded advances for the second day in a row. On the other hand, the US Federal Reserve’s (Fed) anticipated rate decreases may be the reason for the drop in US Treasury yields. This attitude can impede the US Dollar’s growth.

Daily Digest Market Movers: Weaker consumer prices cause the Australian Dollar to weaken

• In contrast to its prior decrease of 0.09%, Australia’s Westpac Leading Index (MoM) climbed by 0.1% in February.
• Recognizing the continuous struggles low-income families experience in the face of increased living expenses, the Australian government has committed to supporting an increase in the minimum wage this year that is in line with inflation.
• Economists surveyed by Bloomberg indicate that the People’s Bank of China (PBoC) is expected to reduce the Reserve Requirement Ratio (RRR) twice more in 2024, for a total of fifty basis points less than what is now expected.
• Leaders of US businesses are expected to meet with Chinese President Xi Jinping. This is a follow-up meeting to his dinner with US investors in San Francisco in November.
• Raphael Bostic, the president of the Atlanta Fed, stated that he expects to see only one rate decrease this year and warned against cutting rates too soon as this could cause more disruption.
• Like most of the board, Chicago Fed President Austan Goolsbee predicts three cuts. Goolsbee did, however, point out that before implementing rate reduction, more proof of a decline in inflation was required.
• US durable goods orders rose 1.4% in February compared with a 1.3% forecast and a 6.9% decrease the prior month.
• US durable goods orders outside of defense increased by 2.2% in February as opposed to the 1.1% and 7.9% declines that were anticipated.
• The US Housing Price Index (MoM) had a 0.1% decline in January compared to a 0.1% increase in December.

Technical Analysis: The Australian Dollar dips to about 0.6520, with the low of March serving as the next support

On Wednesday, the Australian Dollar is trading close to 0.6520. March’s low of 0.6477 is followed by the psychological level of 0.6500, which is a significant support level. The primary support of the 0.6450 level could be tested if the AUD/USD pair breaks below this level. The 23.6% Fibonacci retracement level of 0.6541 could provide immediate support on the upward. The critical barrier at 0.6550 and the 21-day Exponential Moving Average (EMA) at 0.6553 are in line with this region.

AUD/USD: Daily Chart

The current value of the Australian dollar

The Australian dollar’s (AUD) percentage change against the main currencies listed today is displayed in the table below. To the Swiss Franc, the Australian dollar was the weakest.