AUD/USD Price Analysis – Sep 10, 2024

Daily Price Outlook

During the European trading session, the AUD/USD currency pair struggled to maintain its earlier gains and turned bearish around the 0.6655 level, hitting an intraday low of 0.6644.

This decline was primarily driven by a stronger US dollar, which gained momentum after recent labor data hinted at a reduced likelihood of a sharp Fed rate cut in September.

However, the pair managed to recover its intraday losses after the positive trade data from China. Looking ahead, the upcoming Consumer Price Index (CPI) report on Wednesday and the Producer Price Index (PPI) on Thursday will be crucial in shaping the Fed’s rate policy.

These reports could also influence gold prices, given its status as a non-interest-bearing asset.

Stronger US Dollar and Bearish AUD/USD Due to Fed Rate Cut Expectations and Mixed Labor Data

On the US front, the broad-based US dollar gained support as recent labor market data introduced uncertainty about a potential aggressive rate cut by the Federal Reserve (Fed) in September.

According to the CME FedWatch Tool, the market expects at least a 25 basis point rate cut by the Fed, but the chance of a larger 50 basis point cut has slightly decreased to 29.0%, down from 30.0% last week. This shift in expectations contributed to the bearish movement of the AUD/USD pair.

In recent US data, Nonfarm Payrolls (NFP) increased by 142,000 jobs in August, falling short of the 160,000 forecast but improving from July’s revised figure of 89,000.

The Unemployment Rate dropped to 4.2%, as expected, from 4.3% the previous month. Fed Bank of Chicago President Austan Goolsbee indicated that Fed officials are aligning with the market's sentiment about a potential policy rate adjustment.

FXStreet’s FedTracker rated Goolsbee’s comments as dovish, suggesting a lower likelihood of a drastic rate cut.

Therefore, the shift in expectations for a smaller Fed rate cut, combined with mixed US labor data, has led to a stronger US dollar and bearish movement in the AUD/USD pair. This is due to reduced rate cut speculation and improved US economic indicators.

AUD/USD Strengthens Amidst Chinese Trade Data and RBA Rate Cut Expectations

On the AUD front, the AUD/USD pair gained traction after China's Trade Balance data was released on Tuesday. RBC Capital Markets now anticipates the Reserve Bank of Australia (RBA) will cut rates in February 2025, earlier than previously forecasted for May 2025. Despite persistent inflation in Australia, the RBA doesn’t see the slower economic growth as a strong enough reason to lower rates this year.

Meanwhile, Australia's Westpac Consumer Confidence fell by 0.5% in September, reversing August’s 2.8% increase. Traders are closely watching China’s upcoming Trade Balance data due to the strong trade ties between Australia and China. Changes in China’s economic performance can significantly impact Australian markets.

China’s Consumer Price Index (CPI) rose by 0.6% year-on-year in August, a slight improvement from July but below expectations. Monthly CPI inflation increased by 0.4%, missing the forecast. China's Trade Balance showed a surplus of CNY 649.34 billion in August, up from the previous CNY 601.90 billion, with exports increasing by 8.4% year-on-year.

Therefore, the AUD/USD pair strengthened following China's Trade Balance data, while expectations of an earlier RBA rate cut in February 2025 and a drop in Australian consumer confidence influenced the pair. Positive Chinese trade data supported the AUD.

AUD/USD - Technical Analysis

The AUD/USD pair is currently trading at $0.66698, up 0.08% on the day, in a consolidative pattern following a minor bullish movement.

The immediate pivot point sits at $0.6701, which aligns with the 50-day Exponential Moving Average (EMA), acting as a key resistance level.

This suggests that the pair is trading near a crucial juncture, with potential for both upward and downward movement depending on market conditions.

On the upside, immediate resistance is at $0.6720, followed by $0.6751 and a more significant barrier at $0.6793. A break above $0.6720 could fuel further bullish momentum, targeting the higher resistance levels.

However, AUD/USD would need to overcome the key pivot point at $0.6701 to signal a shift toward a sustained upward trend.

On the downside, immediate support is seen at $0.6646, followed by more substantial support at $0.6610 and $0.6580. If the pair fails to maintain its position above $0.6646, bearish sentiment may deepen, with the next target likely at $0.6610.

The Relative Strength Index (RSI) is currently at 46, signaling neutral momentum with a slight bearish tilt, which could indicate limited upward potential unless fresh catalysts emerge.

For now, AUD/USD remains neutral to slightly bullish, with the $0.6701 pivot acting as a key battleground for both bulls and bears.

Related News

USD/CAD Price Analysis – Sep 10, 2024

GOLD Price Analysis – Sep 10, 2024

AUD/USD Price Analysis – Sep 03, 2024