Audusd drops 0.12% amid mixed economic signals

AUDUSD Analysis

Performance after Wednesday
Period	Pct	Chg	Momentum
Wednesday	-0.12%	-7.9 Pips
Week to-date	0.68%	45.5 Pips
September	-0.54%	-36.5 Pips

Upcoming key events (London Time)

Thu 02:30 AM AUD Labour Force Monthly Employment Change

What happened lately

Recent economic data from the United States indicates several notable shifts in key indicators. The Federal Reserve’s latest interest rate projections have seen significant declines across short-term horizons. Specifically, the projections dropped to 4.4%, 2.9%, and 3.4% for various terms compared to previous rates of 5.1%, 3.1%, and 4.1%, respectively, with the longer-term projection slightly increasing to 2.9% from 2.8%. Additionally, the Fed’s decision to lower the Federal Funds Rate to 5% from a previous 5.5% was unexpected. In contrast, August witnessed a rise in building permits to 1.475 million and housing starts to 1.356 million, reflecting a recovering construction sector. Industrial production also increased to 0.8% from -0.6% in July, indicating improving manufacturing output. However, consumer spending showed a downturn, with the Retail Trade Control Group and Monthly Retail Trade excluding Automobiles decreasing to 0.3% and 0.1%, respectively.

The updated economic data and Federal Reserve decisions have direct implications for the AUDUSD. The overall lower-than-expected U.S. interest rates reduce the attractiveness of the U.S. dollar, generally leading to a depreciation. However, the increase in U.S. industrial production and housing activity combined with the decline in consumer spending creates mixed signals in the market. As a result, the AUDUSD rate mildly declined by -0.12% to 0.67594 on Wednesday, indicating market consolidation. Upcoming high-impact events, such as the AUD Labour Force Monthly Employment Change, could further influence the pair, potentially causing increased volatility. How the Australian labor market performs may either counterbalance or exacerbate the current trend based on investor sentiment.

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What can we expect from AUDUSD today?

AUDUSD on Wednesday dropped -0.12% to 0.67594. Price is above 9-Day EMA while Stochastic is falling in overbought zone.

Updated daily direction for AUDUSD looks mixed as the pair is likely to consolidate above 0.67275 (S1).

Looking ahead today, to see upside interest, we prefer to look at price breakout of last daily high of 0.68202 or trades above daily pivot 0.67739. Break above could target R1 at 0.68057. While to the downside, we are looking at 0.67275 (S1) and daily low of 0.67420 as support levels. AUDUSD need to break on either side to indicate a short-term bias. A close below 0.67420 would indicate selling pressure.

For the week to-date, take note that AUDUSD is bullish as the pair continued to trade higher and is up by 0.68% over the past few days.

Key levels to watch out:

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