- The US business activity surprisingly improved in February
- Australian salaries increased at their fastest annual rate in ten years last quarter.
- Markets are expecting Australia’s rates to peak at 4.1%.
Today’s AUD/USD forecast is bearish. The dollar found support on Wednesday as the likelihood that the Fed would need to raise interest rates further rose due to an unexpected surge in American economic activity.
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The US business activity surprisingly improved in February, reaching its best level in eight months, according to numbers made public on Tuesday.
The US Composite PMI Output Index, which gauges the health of the manufacturing and service sectors, rose from 46.8 in January to 50.2 this month.
Australian salaries increased at their fastest annual rate in ten years last quarter, but they fell short of market expectations. This could diminish the need for future aggressive interest rate hikes, which would weaken the local currency.
According to numbers from the Australian Bureau of Statistics, the wage price index increased by 0.8% in the final quarter of 2022 from the previous quarter, which was less than expected at 1.0%.
Yearly pay growth increased to 3.3% from a revised 3.2%, which was below expectations of 3.5% and probably comforted policymakers concerned that excessive inflation might cause a harmful price-wage spiral.
Anticipating an unexpected uptick, markets swiftly drove the Australian dollar down 20 ticks to $0.6847.
Markets had predicted that Australia’s interest rates might peak at as much as 4.35%, but with the news on salaries, those predictions were adjusted toward 4.1%.
AUD/USD key events today
All focus will be on the Federal Reserve policy meeting minutes from the last meeting. These minutes might have clues on the way forward for the Fed.
AUD/USD technical forecast: Bears need more strength to break below 0.6825
The 4-hour chart shows AUD/USD declining after failing to go above the 30-SMA resistance. The RSI is trading below 50, showing strong momentum for bears. The bears broke below the 0.6875 support and are now attempting to break the 0.6825 support.
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However, the move lower has been weak, as seen in the small-bodied candles. This might allow bulls to return at the support. Bears must close below 0.6825 with a strong candle for the move down to continue.
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Saqib Iqbal
