The Australian Dollar (AUD) enjoyed an upward rally against the US Dollar (USD) in Thursday’s trading session, stimulated by the revision of the Q3 Gross Domestic Product (GDP) numbers that worked to soften the Greenback. Other medium-tier economic reports, including Jobless Claims and Philly’s Federal Reserve (Fed) Manufacturing Survey, added to the upside.
In that sense, the final estimate by the US Bureau of Economic Analysis (BEA) revealed a 4.9% annual increase in the US real GDP for Q3, which fell short of the projected market expectation of 5.2%. Other data showed that, in December, the Philly Fed Manufacturing sector survey recorded a significant decline, falling to -10.5, while the US Department of Labor’s initial Jobless Claims report for the week ending December 16 revealed an increase in claims to 215K, compared to the previous week’s 202K. Despite the rise, the figure was lower than the expected 215K. Zooming out, the US dollar is under downward pressure due to increased speculations of Federal Reserve easing. The intensifying expectations are a response to the fallout from the recent Fed’s dovish stance in its last meeting from 2023 last Wednesday, which weakened the US dollar despite its officials’ latest attempts for damage control in the last sessions. To add to that, incoming data that favors the dovish stance and the case for sooner rate cuts may pave the way for further upside for the AUD/USD. For Friday, investors will eye November’s Personal Consumption Expenditures (PCE) figures from the US, a metric closely monitored by the Fed to gauge inflation.
In the meantime, US bond yields hit multi-month lows earlier in the session but seem to be recovering. The 2-year rate sits at 4.34%, and the 5 and 10-year yields are both at 3.86%, making the USD lose interest. The daily chart suggests that the pair has a bullish inclination. This is primarily driven by the Relative Strength Index (RSI) showcasing a positive slope and maintaining its presence in the positive territory. This is indicative of the underlying strength in buying momentum. Further evidence of this bullish bias is mirrored by the Moving Average Convergence Divergence (MACD), which lays out rising green bars. Siding with the bullish momentum, the pair steadily cruises above the 20,100,200-day Simple Moving Averages (SMAs). This not only attests to the grip that buyers have on the market but also reflects their unwavering control on a broader scale. Support Levels: 0.6730, 0.6700, 0.6680. Resistance Levels: 0.6800, 0.6830, 0.6850.