Australian dollar rises amid US economic data anticipation

AUDUSD Analysis

Performance after Tuesday
Period	Pct	Chg	Momentum
Tuesday	0.29%	18 Pips
Week to-date	0.53%	33.3 Pips
February	1.24%	77.2 Pips

Upcoming key events (London Time)

Wed 01:30 PM USD CPI Inflation Rate (12-mth)
Wed 01:30 PM USD CPI Inflation Rate excluding Food and Energy sectors (12-mth)
Wed 03:00 PM USD Federal Reserve Chair Jerome Powell testifies
Thu 01:30 PM USD PPI excluding Food and Energy sectors (12-mth)

What happened lately

The economic calendar for the United States indicates a series of significant events that could impact the financial markets. On Wednesday, the Consumer Price Index (CPI) Inflation Rate for both overall figures and those excluding the volatile food and energy sectors will be released. This data is crucial as it informs the Federal Reserve’s monetary policy decisions. Higher than expected inflation numbers could lead to a tightening of monetary policy. Later, Federal Reserve Chair Jerome Powell is set to testify, providing insights into the Federal Reserve’s economic outlook and policy direction. On Thursday, another important figure to watch is the Producer Price Index (PPI) excluding food and energy sectors. This measure of inflation at the wholesale level can indicate future consumer price changes.

Against this backdrop, the Australian dollar rose modestly by 0.29% against the US dollar to 0.62916 on Tuesday. Without any major domestic economic news from Australia, the movement of the AUDUSD pair is likely being influenced by expectations surrounding the upcoming US economic releases. Rising inflationary pressures in the US could strengthen the US dollar if investors anticipate more aggressive rate hikes from the Federal Reserve. Conversely, if inflation figures are lower than expected, it may reduce pressure on the Fed to tighten, potentially benefiting the Australian dollar.

The AUDUSD exchange rate can be quite sensitive to changes in US monetary policy. With critical US inflation data and a Federal Reserve testimony on the horizon, traders will be keenly monitoring the CPI and PPI figures. An unexpected rise in inflation could fuel speculation of further interest rate hikes, bolstering the US dollar and possibly putting downward pressure on the AUDUSD pair. However, if the data suggest weaker-than-expected inflation, it might reduce the likelihood of immediate Fed actions, potentially supporting the Australian dollar against the greenback. Market volatility can be expected as traders react to these developments. Investors will be evaluating these data to adjust their positions in anticipation of shifts in relative interest rate levels between the US and Australia.

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What can we expect from AUDUSD today?

AUDUSD on Tuesday rose 0.29% to 0.62916. Price is above 9-Day EMA while Stochastic is falling.

Updated daily direction for AUDUSD looks bullish as the pair ended higher after Tuesday trading session.

Looking ahead for the day, immediate upside resistance level is R1 at 0.63091 with break above could target R2 at 0.63266 or figure level area. While towards the downside, we are looking at daily low of 0.62599 as an important support. Break below this level could weaken the current bullish momentum. A break above 0.63020 may suggest continuation after recent positive movement.

For the week to-date, take note that AUDUSD is mixed as compared to the prior week.

Key levels to watch out:

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