Australian Dollar retraces its losses on risk-on sentiment.

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• Australian Dollar retraces its losses on risk-on sentiment.
• Australian job advertisements improved by 0.1% in December, from the 4.6% prior.
• PBoC former director Sheng Songchen stated that China’s property downturn might persist for another two years.
• US Dollar remains steady amid downbeat US bond yields.

The Australian Dollar (AUD) attempts to recover its losses on Monday after a decline in the previous two sessions. Surprisingly, the Australian Dollar gains ground despite a stable US Dollar (USD) amid subdued US Treasury yields. The market is anticipated to be relatively quiet regarding US economic data due to the observance of Martin Luther King Jr. Day on Monday.

Australia’s currency experienced upward support due to heightened market speculation about potential rate cuts by the US Federal Reserve (Fed) in March. This speculation gained momentum, especially after Barclays revised its forecast on Friday for the first Federal Reserve (Fed) rate cut, moving it up to March from June. In a note released on Friday, Barclays analysts expressed their expectation for the Federal Open Market Committee (FOMC) to reduce the Fed Funds rate by 25 basis points at the March meeting.

Australia’s job advertisements released by the Australia and New Zealand Banking Group Limited (ANZ) showed an improvement of 0.1% in December, swinging from the previous decline of 4.6%. Market participants are expected to closely observe the Westpac Consumer Confidence for January and the TD Securities Inflation for December, both scheduled for release on Tuesday. The focus will be shifted toward Consumer Inflation Expectations and labor market data on Thursday.

The People’s Bank of China’s (PBoC) former director Sheng Songchen stated at a forum in Shanghai on Saturday that the property downturn in China might persist for an additional two years before stabilizing, according to Bloomberg. He anticipates that new-home sales nationwide will likely decrease by another 50 million square meters in 2024 and 2025. The annual total for 2025 is expected to plateau around 850 million square meters.

The US Dollar Index (DXY) continues to gain ground for the third successive session. However, the softer Producer Price Index (PPI) data from the United States (US) on Friday might have contributed downward for the US Dollar. US Retail Sales data will be eyed on Wednesday.

The Australian Dollar trades near 0.6690 on Monday, positioned below the psychological barrier at 0.6700 followed by the 14-day Exponential Moving Average (EMA) at 0.6721. A potential breakthrough above the EMA might propel the AUD/USD pair toward the key resistance at 0.6750. On the downside, crucial support lies at 0.6650, in conjunction with the 38.2% Fibonacci retracement level, situated at 0.6637.

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