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The Australian Dollar (AUD) maintains its position near the psychological level of 0.6500 on Friday, retracing losses from the previous two sessions. The AUD/USD pair encountered challenges with a dip in the S&P/ASX 200 index during the early Friday trading session, coupled with declines in coal and iron ore prices. However, a subsequent intraday recovery in the Australian money market turned positive, potentially providing support to the Australian Dollar (AUD) and influencing the pair positively. The US Dollar (USD) has strengthened against the Australian Dollar, supported by an uptick in US Treasury yields observed on Thursday.
RBA Governor Michele Bullock’s affirmation of the RBA’s commitment to managing inflation has likely contributed to finding support for the Australian Dollar. Bullock acknowledged positive trends in recent inflation data but emphasized the need for further progress to reach the target. She mentioned that if consumer spending slows more rapidly than expected, rate cuts could be considered. Additionally, the Commonwealth Bank of Australia (CBA) forecasts a reduction of 75 basis points in the benchmark interest rate for 2024, with the initial cut expected in September.
The US Dollar Index (DXY) aims to build on its recent uptrend for the second consecutive day, even as US bond yields experience a dip. Hawkish remarks from US Federal Reserve (Fed) officials continue to support the US Dollar. Positive data from the US job market further reinforces the Greenback’s strengthening.
Federal Reserve Richmond President Thomas Barkin reiterated the flexibility of policymakers to exercise patience regarding the timing of rate adjustments, citing a robust labor market and persistent disinflation. Federal Reserve Chair Jerome Powell dismissed the notion of a rate cut in March during a press conference following the interest rate decision on January 31.
US Initial Jobless Claims declined to 218K in the week ending on February 2, surpassing the estimated figure of 220K. Continuing Jobless Claims dropped to 1.871M for the week ending January 26, below the anticipated decrease of 1.878M.
