AUD Struggles Amid Global and Domestic Signals

The Australian Dollar (AUD/USD) is navigating turbulent markets, currently trending downward as indicated by its position below the 50-day Simple Moving Average (SMA) at 0.6598. This reflects bearish momentum, further emphasized by a pattern of lower highs and lows, despite China—Australia’s main trading partner—setting a robust growth target of around 5% for 2024.

Q4 2023 GDP Growth and RBA Policy

Australia’s GDP is expected to grow by 0.3% in Q4 2023, marginally higher than the previous quarter. This slight improvement might influence the Reserve Bank of Australia’s (RBA) inflation strategy amidst uncertainties in future monetary policies. The Federal Reserve’s approach to ending its rate hikes also impacts AUD/USD forecasts, with the market keen on Chair Jerome Powell’s statements for hints at possible rate reductions.

Technical Analysis and Market Response

Technical analysis identifies resistance between 0.6510 and 0.6600 and support at February’s low of 0.6443. November’s low of 0.6318 and the 2023 low of 0.6270 mark further support levels. Despite these pressures, AUD/USD experienced a minor gain of 0.38% to close at $0.65220 on Friday, driven by disappointing US manufacturing and consumer sentiment data.

Potential Economic Indicators Supporting AUD

Anticipated improvements in Australian company profits and building approvals may offer the AUD some uplift. Moreover, commentary from Federal Reserve officials, notably FOMC member Patrick Harker, will be closely analyzed for indications of the Fed’s inflation views and rate adjustment plans.

Influence of US Economic Data and Powell’s Remarks

The short-term path for AUD/USD will largely depend on upcoming US economic data, including services PMI figures, the US Jobs Report, and further remarks from Fed Chair Powell. Positioned below both the 50-day and 200-day EMAs, the market sentiment is currently bearish. However, key support and resistance levels, alongside imminent economic reports, will critically shape the currency pair’s direction in the near future.