The Australian Dollar (AUD) saw a minor recovery against the US Dollar (USD), despite lingering concerns about the Australian and Chinese economies. This rebound follows a broader USD weakness due to disappointing US jobs data, but increased expectations of RBA rate cuts are tempering the AUD’s gains.
Market Movers:
- Australian Inflation: The Q2 Producer Price Index (PPI) rose to its highest level since Q1 2023, raising questions about the RBA’s policy response.
- RBA Rate Cut Expectations: Market expectations for an RBA rate cut by year-end have increased, limiting the Aussie’s upside potential.
- US Nonfarm Payrolls: The US economy added fewer jobs than expected in July, and the unemployment rate ticked higher, leading to a weaker USD and fueling expectations of a Fed rate cut in September.
Technical Analysis:
The AUD/USD pair remains below its 20, 100, and 200-day SMAs, confirming a bearish trend. However, the pair has found support near the 0.6480 level, indicating potential resilience. Resistance is expected around the 0.6560-0.6570 zone.
