Australian Dollar weakened on Fed’s hawkish remarks on interest rates trajectory.

…
This is a premium post.
[s2If !current_user_can(access_s2member_level4)]Please register for FREE REGISTER to read full post below containing analysis. In case of any error or you think you are not able to read the full post below, please email us at support#nehcap.com [lwa][/s2If] [s2If current_user_can(access_s2member_level1)]

• Australian Dollar weakened on Fed’s hawkish remarks on interest rates trajectory.
• Australia’s Retail Sales improved with a 0.3% rise in the fourth quarter against 0.2% prior.
• RBA is expected to maintain the OCR at 4.35% at February’s meeting.
• US Dollar surged as ISM Services PMI rose to 53.4, surpassing the expected figure of 52.0.

The Australian Dollar (AUD) attempts to retrace its recent losses on Tuesday. The pair weakens due to hawkish comments from Federal Reserve (Fed) Chair Jerome Powell, coupled with anticipations of a dovish stance from the Reserve Bank of Australia (RBA) on Tuesday. Additionally, the Aussie Dollar (AUD) faces downward pressure from reduced commodity prices, contributing to the weakening of the AUD/USD pair.

Australian Bureau of Statistics released Retail Sales (QoQ) data on Tuesday, indicating an improvement with a 0.3% rise in the fourth quarter compared to the previous growth of 0.2%. Looking ahead, the Reserve Bank of Australia (RBA) is expected to announce its first monetary policy decision for 2024, with the anticipation of maintaining the Official Cash Rate (OCR) at 4.35%.

The Australian economy is going through a cost-of-living crisis, there appears to be limited room for RBA policymakers to raise interest rates further. Instead, the focal point now shifts to when the central bank might commence reducing interest rates. Investors will closely monitor RBA Governor Michele Bullock’s upcoming speech on the monetary policy outlook, seeking additional insights into the central bank’s stance and potential future actions.

The US Dollar Index (DXY) experienced a notable surge following the Federal Reserve’s hawkish stance, driven by robust ISM Services data for January. The ISM Services PMI exceeded expectations, registering at 53.4, surpassing both the consensus figure of 52.0 and the previous month’s 50.5. Additionally, the ISM Services Employment Index saw an improvement, rising to 50.5 from the previous reading of 43.8.

Federal Reserve Chairman Jerome Powell contributed to the strengthening of the US Dollar by dampening expectations of a rate cut. Powell underscored the importance of monitoring inflation’s sustained movement toward the 2% core target. This stance led to an increase in US Treasury yields, putting downward pressure on the AUD/USD pair.

The Australian Dollar trades around 0.6490 on Tuesday, positioned below the resistance level of 0.6500. A potential breach above this level could serve as a catalyst for the AUD/USD pair to test the resistance zone near the major level at 0.6550. Subsequently, further upward movement may lead to encounters with the 23.6% Fibonacci retracement level at 0.6563, ultimately reaching the 21-day Exponential Moving Average (EMA) at 0.6587. On the downside, immediate support is anticipated at the psychological level of 0.6450 following another psychological support level at 0.6400.

[/s2If]

The NEHCAP currently runs the following trading systems for clients. They can be bought and run on your funds.

The system is trading live: LIVE ACCOUNT TRACKING
Contact Us: Contact
The HFT_FIX can be run free for 2 weeks on any broker with a ECN. Apply for a free trial
Join Our Telegram Group