Australian Dollar Unmoved at 0.6300: PCE Data Flat
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- AUD/USD is just drifting around 0.6300 – US inflation report didn’t really shake things up.
- The Fed’s still playing it cool, and worries about trade tariffs and where inflation is heading are still the big market stories.
- Technically speaking, the Aussie looks a bit weak, with charts suggesting it’s struggling to break past some nearby moving averages.
The Aussie Dollar (AUD) feels a bit lost for direction as we head into Friday afternoon in the US, with AUD/USD kind of stuck around that 0.6300 level. The latest US inflation numbers – the Personal Consumption Expenditure (PCE) Price Index – landed, but they didn’t really cause much of a stir. Most of the figures were pretty much as expected, except for the core PCE reading, which nudged up just a hair more than anticipated. You might think the Aussie would catch a bit of a break with the US Dollar looking a little softer, but caution is still the name of the game. Everyone’s still on edge about those trade spats and the Federal Reserve (Fed) trying to figure out what to do next with interest rates.
Daily market snapshot: Aussie Dollar steady after quiet US inflation data
- AUD/USD is still hanging around 0.6300 after the February inflation update came out of the US. Yep, that PCE data was pretty much in line with what everyone was expecting.
- San Francisco Fed President Daly popped up again, saying she still thinks two rate cuts in 2025 are probably on the cards, but patience is key. She highlighted that things could change with inflation and all the tariff stuff going on.
- Overall, the mood felt a bit downbeat as the US slapped some fresh tariffs on cars, and we’re all eyeing that April 2nd deadline for possible trade retaliation.
- The Aussie Dollar’s feeling a bit exposed right now. People are getting a bit more nervous, and when that happens, folks tend to pile into safe-haven assets, like Gold – which just hit record highs again.
- The market’s still guessing when the Fed might cut rates later this year, but nobody’s making any big bets right now with the economy sending mixed signals.
- But it’s not all doom and gloom for the Aussie! Talk of China possibly boosting their economy a bit is helping to limit losses. Australia’s got a lot riding on the Chinese economy through exports, so that’s important.
- Even though the Fed is being cautious, the US Dollar isn’t exactly screaming higher. Traders are more focused on the bigger picture risks and all the geopolitical stuff happening around the world.
- The US Dollar Index is still bumping its head against resistance at 105.00. Technically, it looks like we might just keep seeing this back-and-forth movement for a bit.
- Big money is still betting against the Aussie, with more and more bearish positions being built up. The ongoing uncertainty around global trade and inflation is making folks nervous about the Aussie.
Technical analysis
AUD/USD is struggling to find its footing after the inflation numbers, basically stuck in a tight range around 0.6300. Even though the inflation figures weren’t a surprise, the pair still edged a bit lower, suggesting there’s still a slightly negative feeling towards it. The Relative Strength Index (RSI) has dipped further into neutral territory, hinting at weakness, and the MACD histogram is showing another red bar, also pointing to potential downside. Other indicators like Momentum and Bull Bear Power are also flashing bearish signals. In the short term, the 10-day and 20-day moving averages are now acting as immediate resistance levels, while the longer-term 100-day and 200-day SMAs are still clearly in bearish territory. Key support levels to watch are at 0.6295 and 0.6294, and resistance is around 0.6297 and 0.6303. Without a strong move in either direction, it looks like the pair might just stay in this holding pattern as we head into next week.
Australian Dollar FAQs
One of the biggest things that moves the Aussie Dollar (AUD) is what the Reserve Bank of Australia (RBA) does with interest rates. Because Australia is rich in natural resources, another huge factor is the price of its biggest export, iron ore. The health of the Chinese economy, being Australia’s main trading partner, also plays a big role, as well as things like inflation in Australia, how fast the economy is growing, and its trade balance. And of course, overall market mood – whether investors are feeling risky and buying up assets (risk-on) or playing it safe and sticking to safer investments (risk-off) – also affects the Aussie. Risk-on tends to be good for the AUD.
The Reserve Bank of Australia (RBA) steers the Aussie Dollar (AUD) by setting the interest rates that banks in Australia charge each other for lending money. This then has a ripple effect on interest rates across the whole economy. The RBA’s main job is to keep inflation stable, ideally between 2-3%, and they do this by tweaking interest rates up or down. If interest rates are relatively high compared to other big economies, that usually helps the AUD. If they’re relatively low, it works the other way. The RBA can also use things like quantitative easing (QE) and tightening (QT) to influence borrowing conditions. QE is generally seen as negative for the AUD, while QT is usually positive.
China is Australia’s biggest customer, so how well the Chinese economy is doing has a massive impact on the value of the Australian Dollar (AUD). When China’s economy is booming, they buy more raw materials, goods, and services from Australia, and that increases demand for the AUD, pushing its value up. The opposite happens when the Chinese economy slows down. So, any surprises – good or bad – in Chinese economic data often have a direct and pretty quick effect on the Aussie Dollar and how it trades against other currencies.
Iron ore is Australia’s top export, bringing in a whopping $118 billion a year (as of 2021!), with China being the main buyer. So, the price of iron ore can really drive the Australian Dollar. Generally speaking, if the price of iron ore goes up, the AUD tends to go up too, as overall demand for the currency increases. And if iron ore prices fall, the opposite happens. Higher iron ore prices also usually mean Australia is more likely to have a positive trade balance, which is also a good thing for the AUD.
The Trade Balance – which is basically the difference between what a country earns from selling exports and what it spends on buying imports – is another factor that can sway the value of the Australian Dollar. If Australia is exporting a lot of in-demand products, then its currency will naturally become more valuable just because foreign buyers need to buy AUD to pay for those exports. So, a positive trade balance generally makes the AUD stronger. Conversely, if the trade balance is negative, it can weaken the AUD.
