AUDUSD drops as mixed US economic data and upcoming events influence market

AUDUSD Analysis

Performance after Tuesday
Period	Pct	Chg	Momentum
Tuesday	-0.58%	-36.9 Pips
Week to-date	-0.48%	-30.8 Pips
December	-2.62%	-170.7 Pips

Upcoming key events (London Time)

Wed 07:00 PM USD Fed Interest Rate Decision (Federal Funds Rate)
Wed 07:00 PM USD Interest Rate Projections
Thu 01:30 PM USD GDP annual rate | Q3

What happened lately

The United States’ economic data offers a mixed view, revealing both slight improvements and notable deteriorations. The November Industrial Production demonstrated a modest improvement, advancing to -0.1%, after a decline of -0.3% in October. This indicates a minor recovery but still suggests some weakness in the industrial sector. On a more positive note, the U.S. Monthly Retail Trade saw a rise, climbing to 0.7% in November compared to 0.4% in October. This increase indicates robust consumer spending which is a critical component of economic growth, as reported by the Census Bureau. However, Monthly Retail Trade excluding Automobiles remained unaltered at 0.2%, reflecting steady but possibly restrained consumer demand when big-ticket items like vehicles aren’t considered. Notably, the New York Empire State Manufacturing Index reported by the New York Fed dramatically fell to 0.2 points in December, down sharply from the previous month’s 31.2 points, highlighting significant challenges in the manufacturing sector and potential concerns about future output and economic strength.

The recent dip in AUDUSD, falling by -0.58% to 0.63363, could likely be influenced by these mixed signals from the U.S. economic data and anticipation of high-impact upcoming events. The slight recovery in U.S. industrial production and robust retail sales contribute to a stronger economic outlook which can bolster the U.S. dollar. However, significant attention remains on the imminent Federal Reserve’s interest rate decision and projections along with the upcoming GDP annual rate announcement. These high-impact events are critical as they will greatly influence market perceptions of the U.S. economic health and monetary policy trajectory. Markets are keenly observing whether the Federal Reserve will adopt a more hawkish stance which might further strengthen the dollar, adding downward pressure on the AUDUSD. Conversely, any dovish tones might reduce this pressure, potentially benefiting the AUD. The economic landscape suggests that volatility in AUDUSD could persist amid these upcoming announcements and is largely dependent on their outcomes.

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What can we expect from AUDUSD today?

AUDUSD on Tuesday dropped -0.58% to 0.63363. Price is below 9-Day EMA while Stochastic is falling.

Updated daily direction for AUDUSD looks bearish as the pair posted lower in Tuesday trading session.

Looking ahead for the day, immediate support level is at S1 0.63189 with break below could see further selling pressure towards S2 at 0.63016. To the upside, with the current momentum bearish, we prefer to look at breakout of the recent daily high of 0.63780 as a potential indicator of buying interest. Failure to break the resistance level would continue to echo bearish sentiment. A close below 0.63311 would indicate selling pressure.

For the week to-date, take note that AUDUSD is bearish as the pair posted lower by -0.48%.

Key levels to watch out:

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