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AUD to USD Forecast: Aussie Consumer Confidence and the US CPI Report in Focus

By:
Bob Mason

Before the US CPI Report, consumer and business confidence take center stage, shaping the outlook for Aussie's private consumption and inflation.

AUD to USD Forecast

In this article:

Highlights

  • The AUD/USD slipped by 0.08% on Monday, ending the session at $0.65674.
  • On Tuesday, business and consumer confidence surveys are focal points.
  • The US CPI Report also warrants investor attention later in the day.

Monday Overview of the AUD/USD

The AUD/USD slipped by 0.08%. Following a 0.45% loss on Friday, the Aussie dollar ended the Monday session at $0.65674. The Australian dollar rose to a high of $0.65829 before falling to a low of $0.65499.

Consumer and Business Confidence in the Spotlight

On Tuesday. consumer and business confidence numbers will garner investor interest. A pickup in consumer confidence could signal a positive private consumption outlook. An upward trend in consumption could fuel demand-driven inflation and require the RBA to maintain a hawkish rate path. However, sub-components of the Index will give a better view of consumer spending plans.

Economists forecast the Westpac Consumer Confidence Index to increase by 3% to 82.3 in December.

The NAB Business Confidence Index will also move the dial. Improving confidence could signal an increase in investment and staffing levels. Tighter labor market conditions would support consumer confidence and spending.

Economists expect the NAB Business Confidence Index to increase from -1 to -2 in November.

US CPI Report in the Spotlight

On Tuesday, the US CPI Report will garner investor interest. Hotter-than-expected inflation numbers could reduce bets on an H1 2024 Fed rate cut. Sticky inflation would force the Fed to maintain interest rates higher for longer to curb consumption. A pullback in consumption would dampen demand-driven inflation.

Economists forecast the annual inflation rate to soften from 3.2% to 3.1% and for core inflation to hold at 4.0%.

The CPI Report precedes Wednesday’s Fed interest rate decision, economic projections, and press conference. Friday’s US Jobs Report reduced bets on a March Fed rate cut. The CPI Report could push bets on a Fed rate cut to H2 2024.

Short-Term Forecast

Near-term trends for the AUD/USD will hinge on the US CPI Report (Tues) and the Fed interest rate decision and projections. Sticky inflation and more hawkish FOMC projections could materially impact the Aussie dollar. A drop below $0.65 is possible.

AUD/USD Price Action

Daily Chart

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

An AUD/USD break above the 200-day EMA would support a move to the $0.66162 resistance level.

Australian business and consumer confidence and the US CPI Report are focal points.

However, a break below the trend line would give the bears a run at the 50-day EMA and the $0.64900 support level.

A 14-period Daily RSI reading of 53.03 suggests an AUD/USD move through the $0.66162 resistance level before entering overbought territory (typically above 70 on the RSI scale).

AUD to USD Daily Chart sends bullish near-term price signals.
AUDUSD 121223 Daily Chart

4-Hourly Chart

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

An AUD/USD move through the 50-day EMA would bring the $0.66162 resistance level into play.

However, a fall through the trend line would support a drop to the 200-day EMA.

The 14-period 4-Hourly RSI at 45.56 suggests an AUD/USD drop to the 200-day EMA before entering oversold territory.

4-Hourly Chart sends bearish near-term price signals.
AUDUSD 121223 4-Hourly Chart

About the Author

Bob Masonauthor

With over 20 years of experience in the finance industry, Bob has been managing regional teams across Europe and Asia and focusing on analytics across both corporate and financial institutions. Currently he is covering developments relating to the financial markets, including currencies, commodities, alternative asset classes, and global equities.

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