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AUD/USD Advances Above 0.6800 As US PCE Data Is Anticipated
AUD/USD maintains its position above 0.6800 despite the USD's weakness. The US gross domestic product expanded by 4.9% annually in the third quarter, falling short of expectations of 5.2%. The RBA stated in its December minutes that inflation risks are to the upside, and that the determination of policy will be contingent on incoming data. On Friday, attention will be focused on the Core Personal Consumption Expenditure Price Index (Core PCE) of the United States.
On Friday morning, the AUD/USD pair surges above the 0.6800 level, the highest level in five months, during the early Asian trading session. The strengthening risk appetite and the weakening US Dollar (USD) contribute to the pair's increase. As of press time, the AUD/USD pair is trading at 0.6801, a daily decline of 0.02%.
The annualized growth rate of the US Gross Domestic Product (GDP) for the third quarter (Q3) was revised downward by 4.9% to 4.9% on Thursday, which was lower than the market consensus of 5.2%. Furthermore, for the week ending December 16, the weekly Initial Jobless Claims increased from 203,000 to 205,000. In December, the Philadelphia Fed Manufacturing Index declined from -5.9 in November to -10.5.
Last week, the Federal Reserve (Fed) adopted a dovish stance, indicating that the interest rate hike cycle has concluded and that rate cuts are imminent for the following year. Chairman of the Federal Reserve Jerome Powell refrained from acclaming triumph over inflation and reaffirmed that additional indications of declining inflation are necessary for the central bank to regain confidence that the rate is returning to the 2% target in a sustainable manner. The release of the US Core Personal Consumption Expenditure Price Index (Core PCE) later on Friday will provide additional guidance for traders.
The Reserve Bank of Australia (RBA) maintained the cash rate at 4.35% in light of "positive indications" regarding the fight against inflation. Nevertheless, the RBA acknowledged in its December minutes that there exists a possibility that inflation will persist beyond the anticipated range of 2% to 3%. The central bank will await additional information before evaluating the evolving risk-to-benefit ratio.
On Friday, Australia will disclose Private Sector Credit data. Market participants will pay close attention to the US Core PCE, the preferred inflation gauge of the Federal Reserve, as it is anticipated to increase by 3.3%. Additionally, later on Friday, the University of Michigan will release the Durable Goods Orders report, New Home Sales data, and the Consumer Confidence Survey. These figures may provide the AUD/USD pair with a distinct direction.
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