The Aussie strengthened as hopes of a rate cut by the Reserve Bank of Australia (RBA) were dashed.
Australia's ASX 200 index is higher following a sharp rally in US stocks overnight.
The USD found upside support as mixed US PMI data showed an expansion in the US economy.
U.S. initial jobless claims fell to 2010,000, expected 2180,000, the previous value was 2130 thousand.
The Australian dollar continued to rise on the back of Australia's S&P ASX 200 index rising after a sharp rally in US stocks overnight. Nvidia's upbeat quarterly earnings pushed the S&P 500 and Nasdaq Composite to record all** highs.
Domestic data showed that private sector activity returned to growth for the first time in five months in February, driven by a strong expansion in the services sector, which provided upside support for the Australian dollar. In addition, the Australian dollar benefited from the recent release of the minutes of the Reserve Bank of Australia (RBA) meeting, which led to the market's belief that the central bank would most likely not cut interest rates immediately.
The U.S. dollar index (DXY) found upside support on strong U.S. jobs data, with the U.S. Bureau of Labor Statistics (BLS) reporting that initial jobless claims came in lower than consensus expectations last week. In addition, preliminary data from the mixed S&P Global Purchasing Managers' Index (PMI) showed an economic expansion, reinforcing the case for the Federal Reserve to keep interest rates rising for longer to combat inflationary pressures. In addition, the US Federal Reserve**'s hawkish rhetoric highlighting the avoidance of interest rate cuts in the near term could further support the US dollar (USD).
In February, Judo Bank's Australian Composite PMI rose to 51 from 498, indicating that Australia's private sector is expanding for the first time after a five-month contraction.
Judo Bank's Australian Services PMI was 491 to 528。The manufacturing PMI fell sharply from 50 previously1 down to 477。
Australia's Q4 wages** index (QoQ) rose 09%, down from 13%。The index grew by 42%, which was flat at 4., beating market expectations1%。
The Westpac Leading Index (m/m) fell by 01% vs. 00%。
The RBA's minutes showed that the bank considered the possibility of raising interest rates by 25 basis points or leaving rates unchanged. While recent data suggests that inflation will return to target within a reasonable timeframe, the Board acknowledges the process"It will take some time"。
S&P's analysis of the FOMC minutes showed that inflation is expected to continue to cool in the coming months, despite the current uneven deflationary trend. They maintain their outlook for monetary policy in 2024, which is not expected to change. S&P**, the Fed is likely to cut the policy rate by 25bps at its June meeting and a further cut by a total of 75bps by the end of the year.
Thomas Barkin, president of the Federal Reserve Bank of Richmond, told Reuters that there is still a soft landing for the United States"There is a way to go"。He highlighted the overall positive trajectory of US inflation and employment data. He believes that the inflation challenge in the United States is nearing its end, and the top priority is the time to solve the inflation problem.
Federal Reserve Governor Christopher JWaller) said the initiation of easing and the number of rate cuts will depend on new data. The Committee is prepared to wait a little longer before considering easing monetary policy.
Philadelphia Fed President Patrick THarker) said in a speech at the University of Delaware that the Fed can maintain current interest rates for the time being and is not in a hurry to implement rate cuts. He stressed that the Fed's future actions will be data-driven, with no rate cuts expected in May.
Federal Reserve Governor Lisa CookCook) said at a conference hosted at Princeton University in New Jersey that the risks of achieving employment and inflation targets have leveled off. She said she was more inclined to believe that inflation was moving closer to 2% before starting to cut rates. Cook acknowledged that policy rates will eventually need to be adjusted as the deflationary outlook becomes more sustainable.
The S&P Global U.S. Services PMI for February was 513. Expected 520, the previous value was 525。
The S&P Global U.S. Manufacturing PMI is 515, higher than expected 505 and the previous value of 507。
The S&P Global U.S. Composite Purchasing Managers' Index (PMI) for February was 52 from 520 down to 514。
U.S. initial jobless claims fell to 20 in the week ended Feb. 1610,000 people, the market expectation is 2180,000 compared to 2130,000 people.
The change in existing home sales (m/m) rose by 31%, the previous value decreased by 08%。
The Australian dollar traded at the main level of 0 on FridayIt is near 6570 and followed by a one-week high of 06595 and the psychological threshold 06600 level. Further resistance is located at 06606 of 382% Fibonacci retracement and February high of 06610 level. A breakout of the latter would see the AUDUSD move up to the main level of 0Area near 6650. On the downside, near-term support is at 06550 level. A break below this major level could lead to a retest of the weekly low of 06521, followed by the psychological support level of 06500。
The table below shows the percentage change of the Australian dollar against the major currencies listed this week. The Australian dollar is the strongest against the Japanese yen.
The heat map shows the percentage change between the major currencies. The base currency is selected from the left column, and the **currency is selected from the top row. For example, if you select Euro from the left column and then move along the horizontal line to Japanese Yen, the percentage change shown in the box will represent Euro (Benchmark) Japanese Yen (**
The Reserve Bank of Australia (RBA) sets interest rates and manages monetary policy for Australia. Decisions are made by the Council at 11 meetings each year and ad hoc emergency meetings as necessary. The main task of the Reserve Bank of Australia is to maintain price stability, that is, to keep inflation at 2-3%, at the same time"...Contribute to monetary stability, full employment, and the economic prosperity and well-being of the Australian people. "Its main tool to achieve this is to raise or lower interest rates. Relatively high interest rates can make the Australian dollar (AUD) stronger and vice versa. The RBA's other tools include quantitative easing and tightening.
Traditionally, inflation has been considered a negative factor for currencies because it reduces the overall value of money, but with the relaxation of cross-border capital controls, the opposite has actually been true in recent times. Now, a modest rise in inflation tends to lead to higher interest rates by ** banks, which in turn attracts more capital inflows from global investors seeking a profitable place to deposit their money. This increases the demand for the local currency, which is the Australian dollar.
Macroeconomic data can measure the health of an economy and have an impact on the value of its currency. Investors are more willing to invest their money in secure and growing economies rather than unstable and shrinking economies. More capital inflows increase aggregate demand and the value of the national currency. Classic indicators such as GDP, manufacturing and services PMIs, employment and consumer sentiment surveys all affect the Australian dollar. A strong economy may encourage the Reserve Bank of Australia to raise interest rates, which will also support the Australian dollar.
Quantitative easing (QE) is a tool used in extreme situations when lowering interest rates is not enough to restore credit flows in the economy. Quantitative easing is when the Reserve Bank of Australia (RBA) prints the Australian dollar (AUD) to buy assets (usually ** or corporate bonds) from financial institutions, thereby providing much-needed liquidity to financial institutions. Quantitative tightening usually leads to a weaker Australian dollar.
Quantitative tightening (QT) is the opposite of quantitative easing. It is a measure taken after quantitative easing, when the economy recovers and inflation starts to rise. Under QE, the Reserve Bank of Australia (RBA) buys ** and corporate bonds from financial institutions to provide them with liquidity, while under QR, the RBA stops buying more assets and stops reinvesting the maturing principal of the bonds it already holds. This would be positive (or bullish) for the Australian dollar