Daily Price Outlook
The AUD/USD is trading at 0.6713, having declined by 0.21% in the last 24 hours. The pair suffered significant losses due to China's failure to meet its GDP target and the Reserve Bank of Australia's rate announcement.
China disappointing GDP target
Over the weekend, the Chinese government announced a 5% GDP target for 2023, which is lower than the previous year's target of 5.5%. This figure was below market expectations and indicated Beijing's relatively cautious approach toward an economic recovery this year.
Despite business activity expanding at its highest rate in almost a decade in February after the removal of anti-COVID restrictions, the lower GDP target dampened hopes for a Chinese economic revival.
In addition, currencies that are sensitive to the Chinese economy, such as the Australian dollar, fell after the disappointing GDP target announcement.
RBA Rate Statement
On Tuesday, the Reserve Bank of Australia (RBA) raised interest rates, as expected, to control inflation, reaching a 10-year high. The RBA raised the cash rate target by 25 basis points to 3.60%, and it also increased the interest rate on Exchange Settlement balances by 25 basis points to 3.50%.
RBA Governor Philip Lowe stated that Australia's inflation had likely peaked and was expected to moderate in the coming months. He added that the RBA would continue to follow a data-driven approach for future rate hikes. However, he warned that the Australian economy's path to a soft landing is narrow.
Although the RBA's decision to raise the benchmark interest rate was in line with market expectations, the lack of any hawkish surprise appears to have weighed on the AUD. As a result, the Australian dollar experienced a significant decline.
Powell testimony approaches
Today during the US session, Powell is scheduled to speak before Congress and provide insight into the timeline for the direction of interest rates. However, market participants are uncertain what tone the Fed Chair will take, given that while inflation unexpectedly jumped in January, other economic data showed that the US economy was slowing down.
If Powell takes a more hawkish stance, it will improve expectations for US interest rate action and support the Dollar. Currently, DXY is trading lower at around 104.23.
The nonfarm payrolls report for February, which will be released on Friday, is also a key focus this week. Further indications of job market strength would give the Fed more flexibility to raise rates.
AUD/USD Intraday Technical Levels
Pivot Point: 0.6739
AUD/USD – Technical Outlook
The AUD/USD pair has been trading sideways recently, with its stability remaining below 0.6780. It is still moving within a bearish channel on the chart, supporting our view and targeting the next level of 0.6665.
The EMA50 is also supporting this bearish trend. However, if the pair manages to break above 0.6780, it could stop the current bearish correction and lead to an attempt to regain the primary bullish trend.
The expected trading range for today is between 0.6670 support and 0.6780 resistance.
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