- AUD/USD shows an increase on Thursday, climbing to 0.6630.
- The RBA maintains its hawkish position, potentially balancing the downside.
- The rising Australian Unemployment Rate could affect the Aussie’s performance.
The AUD/USD pair experienced an increase of 0.45% during Thursday’s session, settling near 0.6630. Despite the rise in Australia’s Unemployment Rate in July, strong labor market figures from the country can potentially support the AUD. In addition, the hawkish stance of the Reserve Bank of Australia (RBA) also has a significant impact on the stability of the Aussie.
Relying on the mixed Australian economic outlook and increasing inflation, the RBA’s consistent hawkish position has led the markets to predict only 25 bps of easing for 2024.
Daily digest market movers: Aussie sees improvement and shrugs off soft Unemployment figures
- Thursday saw an upbeat day for the AUD/USD pair, even in the face of a rising Unemployment Rate from 4.1% to 4.2%, according to the Australian Bureau of Statistics (ABS).
- Despite this, the strong performance of the Australian Employment Change and Full-Time Employment results, which both surpassed expectations, helped support the AUD.
- Meanwhile, the RBA continues to maintain its hawkish stance, and it all points out that it may be the last among the G10 central banks to implement interest rate cuts.
- On the contrary, the Federal Reserve (Fed) seems poised to facilitate easing in the foreseeable future, a disparity that can potentially benefit the AUD/USD pair in the months to come.
AUD/USD technical outlook: AUD/USD traders exhibit resilience, outlook remains hopeful
On the technical side, the AUD/USD pair reflects a degree of volatility with the Relative Strength Index (RSI) wavering around 54, indicating a primarily neutral momentum. Meanwhile, the Moving Average Convergence Divergence (MACD) prints flat green bars, contributing to the neutral to bullish outlook.
Key support levels are detected at 0.6560 and 0.6500, whereas resistance appears near the 0.6640 and 0.6600 regions. The latter represents the 100 and 200-day Simple Moving Average (SMA) convergence, which is acting as strong support in recent sessions.
Interest rates FAQs
Interest rates are charged by financial institutions on loans to borrowers and are paid as interest to savers and depositors. They are influenced by base lending rates, which are set by central banks in response to changes in the economy. Central banks normally have a mandate to ensure price stability, which in most cases means targeting a core inflation rate of around 2%. If inflation falls below target the central bank may cut base lending rates, with a view to stimulating lending and boosting the economy. If inflation rises substantially above 2% it normally results in the central bank raising base lending rates in an attempt to lower inflation.
Higher interest rates generally help strengthen a country’s currency as they make it a more attractive place for global investors to park their money.
Higher interest rates overall weigh on the price of Gold because they increase the opportunity cost of holding Gold instead of investing in an interest-bearing asset or placing cash in the bank. If interest rates are high that usually pushes up the price of the US Dollar (USD), and since Gold is priced in Dollars, this has the effect of lowering the price of Gold.
The Fed funds rate is the overnight rate at which US banks lend to each other. It is the oft-quoted headline rate set by the Federal Reserve at its FOMC meetings. It is set as a range, for example 4.75%-5.00%, though the upper limit (in that case 5.00%) is the quoted figure. Market expectations for future Fed funds rate are tracked by the CME FedWatch tool, which shapes how many financial markets behave in anticipation of future Federal Reserve monetary policy decisions.
Information on these pages contains forward-looking statements that involve risks and uncertainties. Markets and instruments profiled on this page are for informational purposes only and should not in any way come across as a recommendation to buy or sell in these assets. You should do your own thorough research before making any investment decisions. FXStreet does not in any way guarantee that this information is free from mistakes, errors, or material misstatements. It also does not guarantee that this information is of a timely nature. Investing in Open Markets involves a great deal of risk, including the loss of all or a portion of your investment, as well as emotional distress. All risks, losses and costs associated with investing, including total loss of principal, are your responsibility. The views and opinions expressed in this article are those of the authors and do not necessarily reflect the official policy or position of FXStreet nor its advertisers. The author will not be held responsible for information that is found at the end of links posted on this page.
If not otherwise explicitly mentioned in the body of the article, at the time of writing, the author has no position in any stock mentioned in this article and no business relationship with any company mentioned. The author has not received compensation for writing this article, other than from FXStreet.
FXStreet and the author do not provide personalized recommendations. The author makes no representations as to the accuracy, completeness, or suitability of this information. FXStreet and the author will not be liable for any errors, omissions or any losses, injuries or damages arising from this information and its display or use. Errors and omissions excepted.
The author and FXStreet are not registered investment advisors and nothing in this article is intended to be investment advice.
