The Australian Dollar experienced a decrease of 0.23% against the US Dollar, trading at 0.6678 due to the impact of higher US yields. This decline was influenced by a variety of factors including rising US yields, fluctuating housing data, and stagnant industrial production. Federal Reserve officials have hinted at the possibility of maintaining higher interest rates in light of mixed results from the Australian jobs report, which showed a revision in unemployment to 4.1%.
Traders are speculating on potential Federal Reserve policy easing, following the release of the latest US consumer inflation report which suggested a possible cut in interest rates by the end of 2024. Despite Wall Street hitting new all-time highs, the market eventually closed with losses. The AUD/USD is currently trading at 0.6678 as the Asian session begins.
On the economic front, Initial Jobless Claims increased above estimates, housing data showed a mix of results, and Industrial Production remained stagnant in April. Fed officials emphasized the need to keep rates higher for a longer period as they monitor inflation trends. In Australia, the latest jobs report indicated an addition of 38.5K jobs in April, with a revised unemployment rate of 4.1%. The majority of the newly added jobs were part-time positions.
Looking ahead, the Australian economic calendar is relatively quiet, while the US will see further Fed speeches, with Governor Christopher Waller leading the discussions. The technical outlook for AUD/USD suggests that while the uptrend remains intact, a drop below 0.6654 could lead to a further decline towards the May 14 low of 0.6579. Conversely, a break above 0.6700 could pave the way for testing the current week’s high of 0.6714 and potentially reaching 0.6750.