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AUD/USD sees impressive 11-week high amid positive economic signals


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The AUD/USD pair soared to an 11-week peak, buoyed by positive economic indicators from Japan and the US. Upcoming US inflation data and the NAB Business Confidence survey are set to influence future market directions.

 

original-size.webpSource: Bloomberg

 

Written by: Tony Sycamore | Market Analyst, Australia
 
Publication date: 

Last week witnessed the Australian dollar against the US dollar marking its most significant ascent in over eleven weeks, finishing 1.52% higher at .6625.

This upward trajectory was fueled by the Australian dollar capitalising on the momentum of the surging Japanese Yen. The impetus came from robust Japanese wage data, which bolstered investor confidence in the Bank of Japan potentially concluding its Negative Interest Rate Policy (NIRP) during its 19 of March meeting.

Additional support for the AUD/USD pair was provided by the US Non-Farm Payrolls report on Friday. The report indicated a moderating labor market, evidenced by revised lower job gains for the preceding two months and an uptick in the unemployment rate to 3.9% from 3.7%. These developments lent credibility to the market's anticipation of three Federal Reserve rate cuts in 2024, aligning with the Federal Reserve's own forecasts.

Looking ahead, the forthcoming US inflation report on Tuesday night holds critical importance for the future direction of currency pairs. Meanwhile, domestic focus will shift to the upcoming release of the NAB Business Confidence survey, which promises to provide fresh insights into the business sentiment within Australia.

What is expected from NAB Business Confidence Index (Tuesday, 12 March at 11.30am)

In January, the NAB Business Confidence index increased to +1, back in positive territory after rebounding from -8 in November to 0 in December.

Business Confidence remains subdued but is expected to rise marginally in the coming months as the focus shifts towards RBA rate cuts during the second half of 2024, and as inflationary cost pressures continue to ease.

NAB Business Confidence Survey chart

 

original-size.webpSource: TradingEconomics

AUD/USD technical analysis

Following last week's rally, the AUD/USD, as viewed on the weekly chart below, appears to have gained the upper hand for now, with room to push towards downtrend resistance at .6800c

However, it is important to note that in the bigger picture, last week's rally appears to be part of an ongoing choppy correction from the October 2022 .6170 low, which does warn of further choppy price action ahead. Particularly around the middle of the range, which is where the AUD/USD is currently trading.

AUD/USD weekly chart

 

original-size.webpSource: TradingView

AUD/USD daily technical analysis

On the daily chart below, the AUD/USD was able to show a clean pair of heels to the resistance provided by the 200-day moving average at .6560, and that now becomes near-term support.

Taking some of the shine off last week's rally after its reversal from Friday night's .6667 high, the AUD/USD starts the week trading in congestion .6625 area. This is a level that the AUD/USD needs to clear if it is to challenge weekly resistance at .6800c.

AUD/USD daily chart

 

original-size.webpSource: TradingView

  • Source: TradingView. The figures stated are as of 11 March 2024. Past performance is not a reliable indicator of future performance. This report does not contain and is not to be taken as containing any financial product advice or financial product recommendation.

 

 

This information has been prepared by IG, a trading name of IG Markets Limited. In addition to the disclaimer below, the material on this page does not contain a record of our trading prices, or an offer of, or solicitation for, a transaction in any financial instrument. IG accepts no responsibility for any use that may be made of these comments and for any consequences that result. No representation or warranty is given as to the accuracy or completeness of this information. Consequently any person acting on it does so entirely at their own risk. Any research provided does not have regard to the specific investment objectives, financial situation and needs of any specific person who may receive it. It has not been prepared in accordance with legal requirements designed to promote the independence of investment research and as such is considered to be a marketing communication. Although we are not specifically constrained from dealing ahead of our recommendations we do not seek to take advantage of them before they are provided to our clients. See full non-independent research disclaimer and quarterly summary.

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