The Reserve Bank of Australia decided to keep rates steady but talked about the possibility of increasing them. In the US, recent data showed weaker-than-expected retail sales, indicating a slowdown in economic activity. However, business activity data revealed a larger-than-expected expansion in the US manufacturing and services sectors.
The AUD/USD pair had a positive week as the Australian dollar strengthened following the RBA policy meeting, while the US dollar fluctuated due to mixed data. The RBA’s discussion of a potential rate hike, driven by high inflation, reduced expectations of a rate cut in December.
Next week, investors will closely monitor US data, including GDP and durable goods orders, which will impact Fed rate cut expectations. If economic indicators continue to show a slowdown, there is a higher likelihood of a September rate cut by the US central bank. However, a shift in data, as seen in the PMI data, could lead to only one rate cut this year by the Fed.
Technically, the AUD/USD price is currently trading between the 0.6580 support and the 0.6701 resistance level. The price initially bounced from the 0.6401 support level, indicating a bullish sentiment. The price is now consolidating near the 0.6701 resistance level, with both bears and bulls vying for control. This consolidation may persist in the upcoming week, but a breakout above 0.6701 is more likely due to the previous bullish momentum.