Australian dollar declines amid US dollar strength and RBA speculation
Australian dollar declines amid US dollar strength and RBA speculation
The Australian dollar (AUD) declined amid a stronger US dollar (USD) due to a rise in US Treasury bond yields on Friday.
Earlier in the day, AUD/USD tried to recover losses after a Reuters poll suggested that the Reserve Bank of Australia (RBA) will maintain current interest rates in June.
The survey showed that 90% of economists expect rates to remain stable in the next quarter, with a possible 25 basis points cut to 4.10% by the end of 2024. In addition, 63% forecast rates to fall to 4.10% or lower by the end of the year, while 35% expect no change.
Despite weak economic data from the US, including a lower Producer Price Index (PPI) and higher initial jobless claims, the US Dollar maintained its strength, FX Street. The Federal Open Market Committee (FOMC) revised its forecasts and now expects only one rate cut this year, up from three in March, which supports the US Dollar and puts pressure on AUD/USD.
Investors are now awaiting the preliminary US Consumer Sentiment Index data, which will provide further insight into consumer confidence and the broader economic outlook.
Market analysis shows that the AUD/USD pair has support around the 50-day exponential moving average (EMA) at 0.6605 and further support around 0.6585. Near-term resistance is identified near the upper boundary of the rectangle at 0.6700 and then the May high at 0.6585.
The latest Australian employment data showed an increase of 39.7k in May, exceeding expectations, and the unemployment rate fell to 4.0% from April's 4.1%. This positive data limits the losses of the Australian dollar, supporting the view that the RBA may not be in a hurry to change its monetary policy stance.
It should be noted that the dynamics of the Australian dollar is still closely linked to domestic economic indicators and trends in global markets. The RBA's upcoming decision will be critical and will have a potential impact on the trajectory AUD/USD.
At the time of writing, AUD/USD is trading at 0.6613, down 0.32% over the past 24 hours.
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