AUD to USD Forecast: Analyzing Australian Home Loan Trends and US Inflation

Australian Home Loans

On Monday, Australian home loan numbers for February will garner investor interest. Economists forecast a 2.25% increase in home loans for February, following a 4.6% decline in January.

Home loan trends could give investors a view of the Australian macroeconomic environment. Rising trends in home loans could indicate loosening credit terms and growing consumer demand for credit. An increasing appetite for credit could reflect improving consumer confidence and indicate a pickup in consumer spending.

Upward trends in consumer spending could fuel demand-driven inflationary pressures. A higher-for-longer RBA rate patch could elevate borrowing costs, reducing disposable income and consumer spending.

In March, the RBA continued to discuss uncertainty about the outlook for household spending. A clearer view of demand would allow the RBA to take a more decisive view of the outlook for interest rates.

US Economic Calendar: Consumer Inflation Expectations and Fed Speakers

On Monday, US consumer inflation expectations will be in focus. Economists forecast consumer inflation expectations to fall from 3.0% to 2.9% in March. A downward trend in consumer inflation expectations could support bets on a June Fed rate cut.

Softer consumer inflation expectation numbers would suggest the Fed is successfully taming inflation.

However, after falling to a three-year low of 3.0% in December, consumer inflation expectations have remained at 3% through February. Sticky inflation could test market bets on a June Fed rate cut with the more influential US CPI Report in focus on Wednesday.

Recent US labor market numbers suggest the Fed may delay interest rate cuts until H2 2024. However, softer wage growth and inflation trends could impact buyer demand for the US dollar.

With inflation in the spotlight, investors should monitor FOMC member chatter. FOMC member Neel Kashkari is on the calendar to speak. Last week, Kashkari warned sticky inflation could leave the Fed in a holding pattern throughout 2024.

Short-Term Forecast

Near-term AUD/USD trends will hinge on the US CPI Report and Fed forward guidance. A pickup in US inflationary pressures could impact investor bets on a June Fed rate hike. Hawkish Fed commentary may tilt monetary policy divergence in favor of the US dollar.

AUD/USD Price Action

Daily Chart

The AUD/USD hovered above the 50-day EMA while sitting below the 200-day EMA, sending bullish near-term but bearish longer-term price signals.

An Aussie dollar break above the $0.65760 resistance level and 200-day EMA could support a return to the $0.66500 handle. A break above the $0.66500 handle would bring the $0.67003 resistance level into view.

Australian home loans, US consumer inflation expectations, and Fed chatter need consideration.

Conversely, an AUD/USD fall below the 50-day EMA could give the bears a run at the $0.64582 support level.

Given a 14-period Daily RSI reading of 53.00, the AUD/USD may return to the $0.66500 handle before entering overbought territory.