Australian Dollar Reaches 10-Week High

There are a few to take note of on the day, as highlighted in bold.

The major ones are for EUR/USD, layered in between the 1.0400 to 1.0450 level. The pair itself also continues to be stuck within this range technically, with the 100-hour moving average seen at 1.0460 and 200-hour moving average seen at 1.0411 currently. As such, the expiries should also play a role in limiting price movements in between that for the session ahead at least.

Then, there is one for AUD/USD at the 0.6375 level. It isn't one that has any technical significance but it rests near the highs for the week. As such, the expiries could keep a lid on price action before rolling off. That especially with the risk mood keeping more cautious as equities are lower ahead of European trading.

For more information on how to use this data, you may refer to this post here.

The Australian dollar traded above $0.635 on Thursday, holding near two-month highs as investors reacted to the latest labor market data.

Australia’s jobless rate edged up slightly to 4.1% in January, up from 4% in December, while employment rose more than expected by 44,000.

Earlier this week, the Reserve Bank of Australia cut its cash rate by 25 basis points to 4.1%, as anticipated.

However, the central bank signaled a more cautious stance on further rate cuts, citing concerns that the disinflation process could stall.

In a press conference following the meeting, RBA Governor Michele Bullock emphasized that the central bank cannot declare victory over inflation just yet and warned that there may be limited room for additional cuts.

Currently, markets are pricing in a gradual easing cycle, with a cash rate forecast of 3.6% by September, implying two more quarter-point rate cuts.

Asian currencies consolidate against the dollar in the morning session ahead of the FOMC meeting's minutes due later today. The minutes will be monitored for any remarks about the effects of increased U.S. tariffs on inflation and spending, CBA's Carol Kong says in a research report. CBA continues to expect three 25bps rate cuts by the Fed this year. The FOMC is likely to 'look through' the positive price effect of increases in tariffs and focus on the negative impact on spending, the economist and currency strategist says. USD/KRW is little changed at 1,442.14; USD/SGD is steady at 1.3422; AUD/USD is flat at 0.6353. (ronnie.harui@wsj.com)

The Australian dollar held steady around $0.635 on Tuesday, hovering near two-month highs after the Reserve Bank of Australia lowered its cash rate by 25 basis points to 4.1%, as widely expected.

However, the central bank signaled a more cautious approach to further policy easing in case the disinflation process stalls.

Moreover, RBA Governor Michele Bullock said at the most-meeting presser that they cannot declare victory on inflation yet, adding that the RBA may not have as much room to cut.

Currently, markets are pricing a shallow easing cycle, forecasting a cash rate of 3.6% by September or two more quarter point rate cuts.

Externally, the Aussie faced downward pressure from the US dollar as Federal Reserve officials signaled that the central bank should refrain from rushing to resume interest rate cuts while it remains focused on curbing inflation.

The Australian dollar fell below $0.635 on Tuesday, reversing earlier gains after the Reserve Bank of Australia reduced its cash rate by 25 basis points to 4.1%, in line with expectations.

This marks the first rate cut since November 2020, driven by easing inflationary pressures.

Traders are now awaiting comments from Governor Michelle Bullock for further insights into the decision.

Australia’s fourth-quarter consumer inflation data showed further deceleration, although the trimmed mean measure— the RBA’s preferred inflation gauge—remains above the 2%-3% target range.

Recent data also revealed that Australian consumer inflation expectations rose to a ten-month high of 4.6% in February, up from 4% in January.

Externally, the Australian dollar came under pressure from a rebound in the US dollar, following signals from Federal Reserve officials that the central bank is in no rush to resume interest rate cuts while focusing on curbing inflation.

The Australian dollar rose above $0.635 on Monday, reaching a two-month high as investors prepared for the Reserve Bank of Australia’s upcoming monetary policy decision.

The RBA is widely expected to cut its cash rate by 25 basis points from its current 4.35%.

However, the central bank’s accompanying statement could take on a hawkish tone, given that trimmed mean inflation remains above the 2%-3% target range.

Recent data also revealed that Australian consumer inflation expectations climbed to a ten-month high of 4.6% in February, up from 4% in January.

On the global front, the Aussie dollar benefited from broad US dollar weakness, driven by softening US economic data and reduced fears of a global trade war.