AUD to USD Forecast: Aussie Dollar Awaits Key U.S. Stats Amid RBA Rate Cut Bets

Bob Mason
Updated: Jun 2, 2024, 09:55 GMT+00:00

Key Points:

  • On Friday (May 24), market risk sentiment will influence buyer demand for the Aussie dollar.
  • Later in the Friday session, US core durable goods orders and Michigan Consumer sentiment numbers will warrant investor attention.
  • Investors should also track FOMC member chatter amidst falling bets on a September Fed rate cut.
AUD to USD Forecast

In this article:

Market Risk Sentiment and RBA Rate Cut Bets

On Friday (May 24), market risk sentiment and commodity price trends will likely influence buyer demand for the AUD/USD.

Iron ore spot price falls on Thursday (May 23), and downward trends in the futures market could pressure the AUD/USD early in the Friday session. Moreover, the Asian market reaction to overnight economic indicators from the US could also limit the appetite of dip buyers.

Recent economic indicators from Australia have raised investor expectations of an RBA rate cut. Wage growth slowed, unemployment rose, and private sector PMI numbers disappointed on Thursday. The stats suggest that the higher inflation and interest rate environment impacted households more.

With private consumption contributing over 50% to the Australian economy, deteriorating labor market conditions would be a headwind for the Aussie dollar. Higher unemployment levels would affect consumer confidence, wage growth, and household spending. Downward trends in consumer spending could dampen demand-driven inflationary pressures.

US Economic Calendar: Durable Goods Orders, Consumer Sentiment, and the Fed

Later in the Friday session, durable goods orders and the finalized University of Michigan Survey of Consumers will warrant investor attention.

Economists forecast core durable goods orders to increase by 0.1% in April after rising by 0.2% in March. Better-than-expected numbers would signal an improving demand environment and align with the recent private sector PMI figures.

However, revisions to the Michigan Consumer Sentiment and Inflation Expectations Indexes also need consideration.

According to preliminary numbers, the Michigan Consumer Sentiment Index declined from 77.2 to 67.5 in May. The Michigan Inflation Expectations Index increased from 3.2% to 3.5%.

While the numbers will influence buyer demand for the US dollar, investors should track FOMC member speeches.

FOMC member Christopher Waller is on the calendar to speak. Reaction to the recent private sector PMI numbers require monitoring. This week, the Fed Governor supported an interest rate cut at the end of the year if data continued to soften. A shift in views toward the timing of a Fed rate cut would influence buyer appetite for the AUD/USD.

Short-Term Forecast

Near-term AUD/USD trends could hinge on the FOMC member speeches. Hotter-than-expected US Services PMI data sank investor bets on a September Fed rate cut. Hawkish Fed commentary could impact buyer demand for the AUD/USD further.

AUD/USD Price Action

Daily Chart

The AUD/USD remained above the 50-day and 200-day EMAs, sending bullish price signals.

An Aussie dollar return to the $0.66500 handle could give the bulls a run at the $0.67003 resistance level. Furthermore, a breakout from the $0.67003 resistance level could bring the $0.67500 handle into play.

US core durable goods orders, the University of Michigan Survey, and FOMC member chatter need consideration.

Conversely, an AUD/USD drop below the 50-day EMA, the $0.65760 support level, and the 200-day EMA could signal a fall toward the $0.64582 support level. Buying pressure may increase at the $0.65760 support level. The EMAs are confluent with the support level.

With a 14-period Daily RSI reading of 51.17, the AUD/USD could move to the $0.67003 resistance level before entering overbought territory.

AUD to USD Daily Chart sends bullish price signals.
AUDUSD 240524 Daily 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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