- Australian Dollar holds ground amid improved risk appetite on Tuesday.
- Australia’s Westpac Consumer Confidence fell by 2.4% in April, against the previous decline of 1.8%.
- US Dollar receives downward pressure as volatility prevails ahead of US CPI.
The Australian Dollar (AUD) continues to hold onto its gains registered in the previous session despite the subdued Westpac Consumer Confidence released on Tuesday. The decline in the US Dollar (USD) provided support for the AUD/USD pair, which could be attributed to the improved risk appetite.
The Australian Dollar strengthens amid a higher domestic equity market. The ASX 200 Index positions for gains as investor attention remains fixed on the Reserve Bank of Australia’s (RBA) interest rate decisions. Investors are growing more doubtful about the need for the RBA to cut interest rates in 2024, especially after positive US data bolstered expectations that the Federal Reserve (Fed) may prolong its higher interest rate stance.
The US Dollar Index (DXY) encounters hurdles as the Federal Reserve carefully evaluates incoming data, prompting fluctuations in the market. Traders eagerly anticipate the release of the US Consumer Price Index data scheduled for Wednesday. They will also focus on Australian Consumer Inflation Expectations and Chinese consumer prices slated for Thursday.
Daily Digest Market Movers: Australian Dollar holds position amid weaker Consumer Confidence
- Australia’s Westpac Consumer Confidence declined by 2.4% in April, against the previous fall of 1.8%.
- Australian data showed on Friday that Trade Surplus (MoM) narrowed to 7,280 million in March, falling short of the expected 10,400 million and February’s reading of 10,058 million.
- Federal Reserve (Fed) Bank of Minneapolis President Neel Kashkari emphasized the importance of the central bank’s commitment to combatting inflation. Kashkari stressed that despite the current inflation rate hovering around 3%, the Fed must strive to bring it back down to the target level of 2%.
- According to the CME FedWatch Tool, the likelihood of a 25-basis point rate cut by the Fed in June has reduced to 51.1%.
- US headline CPI is expected to experience an acceleration in March, whereas the core measure is expected to show a cooling down.
- US Nonfarm Payrolls (NFP) reported a significant increase of 303,000 jobs in March, surpassing expectations of 200,000 and the previous reading of 270,000.
- US Average Hourly Earnings rose by 0.3% month-over-month in March, meeting expectations. The previous reading was 0.2%. There was an increase of 4.1% on an annual basis, aligning with the market consensus but slightly lower than 4.3% prior.
Technical Analysis: Australian Dollar hovers above the psychological support of 0.6600
The Australian Dollar trades around 0.6610 on Tuesday. The AUD/USD pair may experience an upward movement, as it has recently tested the range around 0.6620 and 0.6630 multiple times throughout March. Moreover, the pair surpassed the nine-day Exponential Moving Average (EMA) in the previous week and has found support on it since then. The key resistance region is observed around the major level of 0.6650, followed by March’s high of 0.6667. On the downside, immediate support is identified around the psychological level of 0.6600, followed by the nine-day EMA at 0.6570 and the major support level of 0.6550.
AUD/USD: Daily Chart
Australian Dollar price today
The table below shows the percentage change of Australian Dollar (AUD) against listed major currencies today. Australian Dollar was the strongest against the New Zealand Dollar.
| USD | EUR | GBP | CAD | AUD | JPY | NZD | CHF | |
| USD | 0.06% | 0.02% | 0.08% | 0.01% | 0.01% | -0.09% | -0.02% | |
| EUR | -0.06% | -0.03% | 0.03% | -0.04% | -0.04% | -0.15% | -0.08% | |
| GBP | -0.02% | 0.04% | 0.06% | -0.01% | -0.01% | -0.09% | -0.03% | |
| CAD | -0.08% | -0.02% | -0.06% | -0.06% | -0.06% | -0.15% | -0.11% | |
| AUD | -0.01% | 0.05% | 0.01% | 0.07% | 0.00% | -0.09% | -0.03% | |
| JPY | -0.01% | 0.05% | 0.01% | 0.07% | 0.01% | -0.10% | -0.04% | |
| NZD | 0.09% | 0.14% | 0.11% | 0.17% | 0.10% | 0.10% | 0.05% | |
| CHF | 0.01% | 0.07% | 0.04% | 0.10% | 0.06% | 0.04% | -0.06% |
The heat map shows percentage changes of major currencies against each other. The base currency is picked from the left column, while the quote currency is picked from the top row. For example, if you pick the Euro from the left column and move along the horizontal line to the Japanese Yen, the percentage change displayed in the box will represent EUR (base)/JPY (quote).
Inflation FAQs
Inflation measures the rise in the price of a representative basket of goods and services. Headline inflation is usually expressed as a percentage change on a month-on-month (MoM) and year-on-year (YoY) basis. Core inflation excludes more volatile elements such as food and fuel which can fluctuate because of geopolitical and seasonal factors. Core inflation is the figure economists focus on and is the level targeted by central banks, which are mandated to keep inflation at a manageable level, usually around 2%.
The Consumer Price Index (CPI) measures the change in prices of a basket of goods and services over a period of time. It is usually expressed as a percentage change on a month-on-month (MoM) and year-on-year (YoY) basis. Core CPI is the figure targeted by central banks as it excludes volatile food and fuel inputs. When Core CPI rises above 2% it usually results in higher interest rates and vice versa when it falls below 2%. Since higher interest rates are positive for a currency, higher inflation usually results in a stronger currency. The opposite is true when inflation falls.
Although it may seem counter-intuitive, high inflation in a country pushes up the value of its currency and vice versa for lower inflation. This is because the central bank will normally raise interest rates to combat the higher inflation, which attract more global capital inflows from investors looking for a lucrative place to park their money.
Formerly, Gold was the asset investors turned to in times of high inflation because it preserved its value, and whilst investors will often still buy Gold for its safe-haven properties in times of extreme market turmoil, this is not the case most of the time. This is because when inflation is high, central banks will put up interest rates to combat it. Higher interest rates are negative for Gold because they increase the opportunity-cost of holding Gold vis-a-vis an interest-bearing asset or placing the money in a cash deposit account. On the flipside, lower inflation tends to be positive for Gold as it brings interest rates down, making the bright metal a more viable investment alternative.
