AUD/USD: Critical Events to Drive Weekly Dynamics

Quick Look:

• The People’s Bank of China will likely maintain key rates; any changes could influence AUD significantly.
• AUD/USD shows bearish trends; key resistance is $0.64582, and support is $0.62713.
• Australian and US inflation figures due this week could heavily impact market expectations and Fed rate decisions.

This week, financial markets are at the edge of their seats with crucial economic decisions. Moreover, upcoming data releases are going to influence currency movements heavily. Particularly focusing on the Australian Dollar (AUD) and the US Dollar (USD).

Central Banks’ Decisions: Spotlight on China and the US

Today, the People’s Bank of China (PBoC) will announce its rate decisions. The market expectations are leaning towards maintaining the one-year Loan Prime Rate (LPR) at 3.45% and the five-year LPR at 3.95%. Market participants closely monitor this event, as any unexpected rate cut could significantly boost AUD demand due to the positive ripple effects on the Australian economy.

Simultaneously, the US will release the Chicago Fed National Activity Index (CFNAI), with analysts forecasting a rise from 0.05 to 0.09. Positive outcomes here could dampen the expectations of multiple rate cuts by the Federal Reserve in 2024. This could add another layer of complexity to the Fed’s forward guidance amid mixed signals from recent economic data.

Forex Update: Analyzing AUD/USD Market Trends

The AUD/USD pair currently displays bearish signals, trading below the 50-day and 200-day Exponential Moving Averages (EMAs). The Relative Strength Index (RSI) stood at 37.91. Therefore indicates the possibility of a further decline to $0.63500 before the pair enters the oversold territory. Investors’ attention is on the resistance and support levels. With immediate resistance at $0.64582 and major support at $0.62713.

Key Inflation Data: What to Watch This Week

This week is significant for inflation data, with Australia set to release crucial inflation numbers on Wednesday, followed by the US on Friday. Market sentiment is likely to be swayed by these releases, as higher-than-expected figures in the US might scale back bets on a potential Fed rate cut in September.

Additional Market Movers Impacting AUD

The financial landscape is also affected by several other factors. Most importantly, China is expected to announce details of a fiscal stimulus package which could impact AUD demand substantially. Moreover, the US monetary policy remains in focus, with recent statements from Federal Reserve officials suggesting a more cautious approach to rate cuts. Furthermore, new tariffs introduced by China on US goods, specifically a 43.5% rate on propionic acid, add a layer of trade tension that could influence market dynamics.

Sentiment Indicators and Global Influences

The Australian Dollar recently broke a two-day losing streak, buoyed by improved risk sentiment following a de-escalation in the Middle East. Meanwhile, despite higher US Treasury yields, the US Dollar Index (DXY) is facing downward pressure, influenced by hawkish comments from Federal Reserve officials.