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22 March 2024 | FXGT.com

AUD under pressure by Strong US Data and Chinese Yuan Weakness

  • Aussie Dollar Decline: The Australian dollar dropped to $0.6510, influenced by a significant decline in the Chinese yuan amid expectations of policy easing in China. Despite a brief rally from a strong local jobs report on Thursday, the Aussie was unable to maintain gains against a generally stronger U.S. dollar.
  • Australian Employment Data: Australia’s employment surge with 116,500 new jobs in February and a drop in the unemployment rate to 3.7% exceeded forecasts, temporarily boosting the Australian Dollar.
  • US Data Triggers AUD/USD Fall: The release of US PMI data, Initial Jobless Claims, and the Philadelphia Fed Manufacturing Index strengthened the USD, causing a bearish shift in momentum for the AUD/USD pair.
  • Key US Economic Indicators: US S&P Global Composite PMI held above the expansion level at 52.2, with Manufacturing PMI at 52.5 surpassing expectations. Services PMI at 51.7 fell short of forecasts, while the Philadelphia Fed Manufacturing Survey and Initial Jobless Claims outperformed projections.
  • Reserve Bank of Australia’s Rate Decision: The RBA maintaining the cash rate at 4.35%, a 12-year high, for the third consecutive meeting, provides insight into the central bank’s stance on inflation and economic growth, influencing investor sentiment towards the AUD.
  • RBA’s Inflation Outlook: By removing the prior warning that an additional rate hike was possible, the RBA signalled its confidence in declining inflation, fuelling speculation that rate cuts could commence later in the year. The RBA’s decision to drop its tightening bias contributed to the Australian dollar’s weakness.
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