The AUDUSD exchange rate will be in focus this week with Australian business data and US inflation.
AUDUSD – Daily Chart
The price of the AUDUSD has surrendered the key resistance at 0.6870. The price has now moved lower through 0.6798. The next target on the downside is at 0.6620.
The data starts on Tuesday at 8:30 HKT with NAB business confidence data and ANZ-Indeed Job figures. Economists expect job adverts to increase by 0.4% in September, following a 2.1% slide in August.
Labour market conditions are an important indicator for the Reserve Bank of Australia. Higher-than-expected job opportunities could signal a pickup in job creation and wages. Higher wages would also boost consumer spending and demand-driven inflation, possibly delaying an RBA rate cut until 2025.
Economists expect the NAB Business Confidence Index to increase from -4 in August to +2 in September. Improving confidence at businesses may suggest increasing investment and job creation.
Further data on Wednesday will be the Westpac Consumer Confidence Index. Economists predict the Index will increase by 0.8% in October after a 0.5% drop in September. Improvement in consumer spending trends could boost the Aussie economy as private consumption accounts for more than 50% of GDP. Furthermore, consumer confidence is a leading indicator of inflation where economists continue to see stubborn pricing trends with inflation expectations of 4.3% in October, down from 4.4% in September.
Investors are currently trying to work out the chances for a Q4 2024 RBA rate cut. Analysts are also worried about the Middle East conflict which could affect the Aussie economy.
“For the conflict to have a material and long-lasting impact on the market, this needs to become a broader war with a significant impact on the global economy through constrained oil supply or rising shipping costs, for example, which could up-end the current expectations for a rapid rate cutting cycle,” said Ballinger Group analyst Kyle Chapman.
The US dollar has been strengthening as its own jobs market fares well but there is also the potential for safe haven demand in the US dollar as markets await action from Israel against Iran which risks sparking a wider conflict.
