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AUD/USD: Australian Dollar Drifts After Mixed Confidence Data

Published 07/09/2024, 07:13 AM

The Australian dollar continues to show little movement this week. AUD/USD is trading at 0.6638 in the European session, up 0.02% on the day. Australia released mixed confidence indicators earlier today while there are no US economic releases. Federal Reserve Chair Powell testifies before the US Senate Banking Committee later today.

Australian confidence indicators presented a mixed picture of the mood in the private sector. The Westpac Consumer Confidence Index declined by 1.1% in July after a strong gain of 1.7% in June. This marked the fifth decline this year as consumers have been squeezed by high borrowing costs and sticky inflation. The index fell to a six-month low of 82.7 and a pickup in economic activity will depend on consumers feeling confident and opening up their wallets and purses.

Business confidence is in better shape, as the NAB Business Confidence index rebounded to 4 in June, after a revised -2 in May. This was the highest level since January 2023. The improvement in confidence rippled throughout the economy as most industries, including manufacturing, posted increases. At the same time, business conditions edged lower and employment fell, reflecting the slowing economy.

Fed Chair Powell will deliver his semi-annual monetary policy testimony today and the markets will be looking for hints about a September rate cut. Powell sounded hawkish at the ECB forum in Portugal last week, reiterating that the Fed needs to see further evidence that inflation will continue to fall before hitting the rate-cut button. The markets, however, continue to show more optimism about a September cut. The probability of such a move has climbed to 73%, compared to 63% a week ago and just 46% one month ago, according to the CME’s FedWatch tool.AUD/USD-4-Hour Chart

AUD/USD Technical

  • AUD/USD is testing resistance at 0.6744. Above, there is resistance at 0.6755
  • 0.6726 and 0.6715 are the next support levels

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