Ella 
The Australian dollar (AUD) continued its upward momentum on Friday, recovering from a three-month low of 0.6508 hit on Thursday. U.S. economic data was mixed, putting downward pressure on the U.S. dollar (USD). Additionally, improving producer price index (PPI) data provided support for the Australian dollar (AUD). Therefore, these factors combine to provide upside support for AUD/USD.
The fourth-quarter Producer Price Index (PPI) released by the Australian Bureau of Statistics showed improvement, with a year-on-year growth rate of 4.1%, exceeding the previous value of 3.8%. In addition, strengthening Australian currency markets also provided support for the recovery of the Australian dollar. Analysts unanimously expect the Reserve Bank of Australia (RBA) to hold interest rates steady at 4.35% at its February policy meeting, a Reuters poll showed.
Former Reserve Bank of Australia board member Warwick McKibbin has suggested Australia’s cash rate may remain at around 4.5% for an extended period. However, the Australian dollar has also encountered challenges, with bond traders raising expectations for an early interest rate cut by the Reserve Bank of Australia after an unexpectedly weak quarterly inflation report. Going forward, markets are fully pricing in two quarters of interest rate cuts in 2024, with the first adjustment expected in August.
The U.S. dollar index (DXY) fell after mixed U.S. economic data released on Thursday, coupled with low U.S. Treasury yields. Initial jobless claims rose to 224,000 for the week ended Jan. 26, beating the previous reading of 215,000 and the forecast of 212,000. However, the ISM Manufacturing PMI improved, rising to 49.1 from 47.1 previously, surpassing January’s reading
