- Short-term US consumer inflation projections hit their lowest level in nearly three years in December.
- November retail sales in Australia saw their biggest jump in two years.
- The swaps showed that the RBA tightening campaign is probably over.
On Tuesday, the AUD/USD outlook turned bearish, driven by a stronger dollar as investors strategically positioned themselves in anticipation of the upcoming US inflation report. On Thursday, US inflation is likely to provide further insight into the Fed’s policy outlook in the coming months.
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In Australia, November retail sales saw their biggest jump in two years due to Black Friday discounts.
Despite a 425 basis point increase in interest rates, consumer spending remained resilient. This is attributed to rising house prices, population growth and savings from pandemic stimulus measures. However, the Reserve Bank of Australia is likely to ignore the November retail sales result, given the distortion caused by Black Friday sales.
Meanwhile, exchanges indicated that the RBA’s tightening campaign is likely over. Furthermore, there will be around 40 basis points of easing for 2024.
Elsewhere, ANZ research revealed a significant increase in consumer confidence in Australia in early 2024. It reached its highest level in almost a year. In particular, confidence among home owners has soared due to rising house prices and the belief that interest rates are likely to have peaked.
Meanwhile, data on Monday showed that US consumers’ short-term inflation projections hit their lowest level in nearly three years in December. Consequently, bets on a Fed rate cut rose.
AUD/USD key events today
No major events from Australia or the US will be announced today. Therefore, investors may be wary of inflation in both countries.
AUD/USD Technical Outlook: Price respects 30-SMA resistance
Australian bulls failed in their attempt to push above the 30-SMA, allowing the bears to continue their downtrend. The pullback to the SMA came after the price paused in a strong support zone consisting of the 0.6674 support level and the 0.618 fib level. Earlier, the bearish move tried to break below the support zone, but the move was sharply rejected, making a big fuse.
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A break above the 30-SMA would signal a bullish takeover, allowing the price to retest the 0.6775 resistance level. However, with the price still below the SMA and the RSI below 50, the bias remains bearish. Therefore, the price is likely to retest the support zone.
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