- Australian retail sales rebounded in early 2024 after falling in December.
- Annual sales growth in Australia remained low due to high interest rates.
- Markets braced for another US inflation report on Thursday.
The AUD/USD outlook showed a neutral outlook as the Australian dollar danced after the release of mixed economic data. Meanwhile, investors were cautious ahead of new US inflation data that will guide the outlook for interest rates.
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Data on Thursday revealed retail sales in Australia rebounded in early 2024 after falling in December. However, the 1.1% increase missed forecasts of 1.5% growth. Moreover, year-on-year sales growth remained low due to high interest rates.
Meanwhile, another report indicated a 0.8% increase in business investment in Q4. This increase was due to growth in the mining sector, which is positive for the economy. The RBA is still not convinced that its fight to curb inflation is over. As a result, policymakers said at the last meeting that there was a chance the central bank could raise interest rates.
However, following Tuesday’s inflation report, traders are more confident that the RBA’s rate hike cycle is over. In particular, inflation in Australia was at its lowest level in two years in January.
Meanwhile, markets braced for another US inflation report on Thursday. The core PCE price index is an important report because the Fed uses it as the best measure of inflation in the country. Therefore, it carries a lot of weight and is likely to affect the outlook for a rate cut in the US.
AUD/USD key events today
- The core US PCE price index
- First jobless claims in the US
AUD/USD Technical Outlook: Price stops at 0.618 Fib and 0.6500 psychological barrier
On the technical side, AUD/USD paused at the 0.618 Fib level, which also lies at the key psychological level of 0.6500. Meanwhile, the bias is bearish as price is trading well below the 30-SMA with RSI below 50, supporting bearish momentum.
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Although the bears tried to break below this strong support zone, the price pulled back above. This is a sign that it has declined below the support zone. However, the bearish bias is strong. Therefore, even if the price consolidates at this support, it could eventually fall below. A break below would allow the bears to retest the 0.6450 support level.
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