Technical Analysis

AUD/USD Price Analysis – Jan 11, 2024

By LonghornFX Technical Analysis
Jan 11, 20243 min

Daily Price Outlook

The AUD/USD currency pair extended its winning streak and drew some further bids around the 0.6720 level. However, the upward trend can be attributed to the ongoing risk-on market sentiment, which typically supports the Australian dollar and contributes to gains in the AUD/USD currency pair. Furthermore, the positive Australian Trade Balance data has played a significant role in bolstering the AUD/USD pair.

Investors are looking forward to release of the US December Consumer Price Index (CPI). This data is crucial for understanding inflation trends and can strongly influence expectations about the US Federal Reserve's monetary policy.

Australia's Robust Economic Indicators and Potential Impact on AUD/USD Pair

It's worth noting that Australia's trade surplus expanded in December, reaching 11,437 million, beating expectations of 7,500 million. This surpasses the previous reading of 7,129 million, as reported by the Bureau of Statistics. Despite mixed economic signals in Australia, with a slight dip in the Monthly Consumer Price Index for November and a boost in Retail Sales, lower-than-expected inflation figures suggest a potential pause by the RBA at its upcoming February meeting.

Notably, the Consumer Price Index slipped to 4.3% (YoY), just below the expected 4.4%, while Retail Sales for November rose by a higher-than-expected 2.0%, bouncing back from a 0.2% decline. Building Permits showed a 1.6% increase, contrary to the anticipated 2.0% decline.

Therefore, the positive economic data, including an expanded trade surplus and strong retail sales, will likely bolster the Australian dollar (AUD) and contributes to the AUD/USD pair gains. However, the potential RBA rate pause due to lower inflation figures could introduce uncertainty, impacting the AUD/USD pair.

Fed's Rate Cut Anticipation and Positive Economic Data: Potential Impact on Gold Prices

In the US, Atlanta Fed President Bostic anticipates two quarter-point rate cuts by end-2024 due to a greater-than-expected decline in inflation. Fed Governor Bowman suggests maintaining the policy rate, stating it may be appropriate to cut if inflation falls to the 2% target. Positive US economic data includes a rise in December Nonfarm Payrolls to 216K, beating expectations, and improved Average Hourly Earnings. The US Dollar Index declines on weaker Treasury yields, while traders favor risk amid speculation of five rate cuts in 2024.

Therefore, the anticipation of two potential rate cuts by the end of 2024, along with positive US economic data, may weaken the US Dollar. This could boost gold prices as investors seek alternative assets amid increased uncertainty and a depreciating currency.

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