AUD to USD Forecast: Trade Data and US CPI Report to Influence the Aussie Outlook

Highlights

• The AUD/USD gained 0.19% on Wednesday, ending the session at $0.66996.
• On Thursday, trade data from Australia will warrant investor attention.
• Later in the session, the US CPI Report also needs consideration.

Wednesday Overview of the AUD/USD

The AUD/USD gained 0.19%. Partially reversing a 0.49% decline from Tuesday, the Australian dollar ended the session at $0.66996. The Australian dollar fell to a low of $0.66786 before rising to a high of $0.67129.

Australian Trade Data in Focus

On Thursday, trade data from Australia will garner investor interest. Improving trade terms would bolster the Australian economy and the Aussie dollar. Australia has a trade-to-GDP ratio above 50%, with 20% of the workforce in trade-related jobs.

Improving labor market conditions could fuel consumer spending and demand-driven inflation. The net effect could be a delay in RBA rate cuts.

Beyond the headline figure, investors must consider trade terms with China. China accounts for one-third of Australian exports. Improving demand from China could signal a pickup in the global demand environment. Significantly, increased demand from China may ease concerns about the Chinese economy.

Economists forecast the Australian trade surplus to widen from A$7.129 billion to A$7.500 billion in November.

US Economic Calendar: US CPI Report and Jobless Claims

On Thursday, the US CPI Report and weekly jobless claims warrant investor attention. Hotter-than-expected US inflation numbers could reduce bets on a March Fed rate cut. A more hawkish-than-projected Fed rate path could impact borrowing costs and reduce disposable income. Downward trends in disposable income may reduce consumer spending and dampen demand-driven inflation.

Economists forecast the US annual inflation rate to rise from 3.1% to 3.2% in December. However, economists expect the core inflation rate to soften from 4.0% to 3.8%.

The focus will be on the US CPI Report. However, a spike in jobless claims would need consideration. A weaker labor market could impact wage growth and reduce disposable income. Economists predict initial jobless claims to increase from 202k to 210k in the week ending January 6. An increase to 210k would unlikely influence investor bets on a March Fed rate cut.

Short-Term Forecast

Near-term trends for the AUD/USD will hinge on US inflation numbers. The Australian Monthly CPI Indicator signaled a softer inflation environment. A pickup in US inflation could tilt monetary policy divergence toward the US dollar.

AUD/USD Price Action

Daily Chart

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

An AUD/USD move through the $0.67286 resistance level would support a run at the $0.68096 resistance level.

On Thursday, the focus will be on Australian trade data and US inflation numbers.

However, a drop below the $0.66500 handle would give the bears a run at the 50-day EMA and the $0.66162 support level.

A 14-period Daily RSI reading of 49.86 suggests an AUD/USD fall to the 200-day EMA before entering oversold territory (typically above 70 on the RSI scale).

4-Hourly Chart

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

An AUD/USD breakout from the 50-day EMA and the $0.67286 resistance level would bring the $0.68096 resistance level into play. Selling pressure may intensify at $0.67250. The 50-day EMA is confluent with the resistance level.

However, a fall through the 200-day EMA would bring the $0.66162 support level into view.

The 14-period 4-Hourly RSI at 44.39 indicates an AUD/USD drop to the $0.66162 support level before entering oversold territory.