- The Australian Dollar (AUD) edges lower in Thursday’s early European session.
- Increased bets on Fed rate cut might support the Aussie.
- The US Initial Jobless Claims, Housing data, Philly Fed Manufacturing Index, and Fed’s Neel Kashkari speech are due on Thursday.
The Australian Dollar (AUD) trades in negative territory on Thursday. The downside of the pair might be limited amid the hawkish stance from the Reserve Bank of Australia (RBA) at its June meeting on Tuesday. Additionally, weaker-than-expected Retail Sales have fueled speculation for US Federal Reserve (Fed) rate cuts later this year, which might weigh on the Greenback and create a tailwind for AUD/USD.
However, the RBA statement indicated that the economic outlook remains uncertain, and the process of taming inflation to target is unlikely to be smooth. Traders will take more cues from the preliminary Australia’s Judo Bank Purchasing Managers Index (PMI) for May on Friday. Any sign of recovery in the Australian economy might prompt the Australian central bank to delay the rate cut, which might lift the Aussie against the USD.
Daily Digest Market Movers: Australian Dollar weakens amid RBA’s hawkish hold
- The Australian central bank delivered a hawkish hold, as widely expected. The RBA kept the cash rate unchanged at 4.35% and reiterated that “the Board is not ruling anything in or out.”
- The RBA Governor Michele Bullock said during the press conference that the board discussed the option of raising rates while the case for a rate cut was not considered, adding that it “will do what is necessary” to return inflation to target.
- The first reading of the Australian Judo Bank Manufacturing PMI is projected to improve to 50.6 in June from 49.7 in May.
- Odds of a September Fed funds rate cut rose to 67% after the disappointing retail sales data. Fed funds futures also raise expectations for 50 basis points (bps) of total rate cuts this year.
- The US Initial Jobless Claims for the week ending June 15 are estimated to decline by 235,000 from the previous week's 242,000.
Technical Analysis: AUD/USD remains constructive in descending trend channel
The Australian Dollar trades softer on Thursday. The AUD/USD pair remains capped within a descending trend channel since May 14. The pair keeps the positive vibe beyond the key 100-day Exponential Moving Average (EMA) on the daily chart. The bullish momentum in the 14-day Relative Strength Index (RSI) continues to reinforce the pair’s upside.
A decisive break above the upper boundary of the descending trend channel of 0.6675 will attract some buyers to the 0.6700 psychological level. Extended gains will see a rally to 0.6760, a high of January 4.
On the flip side, a crucial support level for AUD/USD will emerge at 0.6590, the 100-day EMA. Further south, the next contention is seen at 0.6575, the lower limit of the channel. A breach of this level will expose 0.6510, a low of March 22, followed by 0.6465, a low of May 1.
US Dollar price this week
The table below shows the percentage change of US Dollar (USD) against listed major currencies this week. US Dollar was the strongest against the Japanese Yen.
| USD | EUR | GBP | CAD | AUD | JPY | NZD | CHF | |
| USD | -0.38% | -0.27% | -0.17% | -0.83% | 0.29% | 0.07% | -0.68% | |
| EUR | 0.30% | 0.10% | 0.12% | -0.52% | 0.69% | 0.36% | -0.49% | |
| GBP | 0.27% | -0.09% | 0.10% | -0.56% | 0.59% | 0.32% | -0.40% | |
| CAD | 0.17% | -0.22% | -0.11% | -0.66% | 0.49% | 0.23% | -0.51% | |
| AUD | 0.88% | 0.48% | 0.59% | 0.69% | 1.17% | 0.92% | 0.18% | |
| JPY | -0.31% | -0.70% | -0.60% | -0.46% | -1.15% | -0.24% | -1.01% | |
| NZD | -0.07% | -0.45% | -0.32% | -0.23% | -0.90% | 0.24% | -0.71% | |
| CHF | 0.67% | 0.31% | 0.39% | 0.50% | -0.16% | 1.00% | 0.73% |
The heat map shows percentage changes of major currencies against each other. The base currency is picked from the left column, while the quote currency is picked from the top row. For example, if you pick the Euro from the left column and move along the horizontal line to the Japanese Yen, the percentage change displayed in the box will represent EUR (base)/JPY (quote).
