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AUD to USD Forecast: Wage Growth Dynamics and RBA Maneuvers

By:
Bob Mason
Updated: Feb 20, 2024, 22:49 UTC

Key Points:

  • The AUD/USD gained 0.16% on Tuesday, ending the session at $0.65485.
  • On Wednesday, Australian wage growth figures for Q4 will draw investor interest.
  • Later in the session, FOMC member speeches and the FOMC Meeting Minutes warrant investor attention.
AUD to USD Forecast

In this article:

Tuesday Overview of the AUD/USD

The AUD/USD gained 0.16% on Tuesday. Following a 0.15% rise on Monday, the Australian dollar ended the session at $0.65485. The Australian dollar fell to a low of $0.65214 before rising to a Tuesday high of $0.65791.

Q4 Wage Growth to Influence the RBA Rate Path

On Wednesday, Australian wage growth figures for Q4 warrant investor interest. Economists forecast wages to increase by 4.1% in Q4 after rising by 4.0% in Q3.

On Tuesday, the RBA Meeting Minutes revealed ongoing RBA board member concerns about inflation among board members. Hotter-than-expected wage growth figures could raise bets on an RBA rate hike.

An upward trend in wages could fuel consumer spending and demand-driven inflation. A more hawkish RBA rate path could raise borrowing costs and reduce disposable income. Downward trends in disposable income could curb consumer spending and dampen demand-driven inflation.

Beyond the numbers, investors must continue to monitor chatter from Beijing. Pledges to roll out a fiscal stimulus package would drive buyer demand for the Aussie dollar.

US Economic Calendar: Fed Speakers and the FOMC Meeting Minutes

On Wednesday, FOMC member speeches will garner investor interest. FOMC members Raphael Bostic and Michelle Bowman are on the calendar to speak. Reactions to the recent inflation figures and views on interest rate cuts would move the dial.

Later in the session, the FOMC Meeting Minutes warrant investor attention. Investors have reduced bets on Fed rate cuts in March and May. However, the markets have raised bets on a June Fed rate cut. The minutes could give clues on what to expect through H1 2024. However, the markets may consider the minutes dated.

Hotter-than-expected US consumer and producer prices impacted bets on an H1 2024 Fed rate cut. The inflation numbers were out after the FOMC Meeting.

Short-Term Forecast

Short-term AUD/USD trends will hinge on Australian wage growth, US services PMIs, and Fed chatter. Hotter-than-expected wages could raise bets on an RBA rate hike. In contrast, a pickup in service sector activity would delay the timing of a Fed rate cut. A more hawkish RBA rate path could tilt monetary policy divergence toward the Aussie dollar.

AUD/USD Price Action

Daily Chart

The AUD/USD hovered below the 50-day and 200-day EMAs, sending bearish price signals.

An Aussie dollar break out from the 50-day EMA would support a move to the 200-day EMA and the $0.66162 resistance level.

On Wednesday, Australian wage growth, Fed chatter, and the FOMC Meeting Minutes need consideration.

However, a drop below the $0.65500 handle would give the bears a run at the $0.64900 support level.

A 14-period Daily RSI reading of 48.89 suggests an AUD/USD drop below the $0.64900 support level before entering oversold territory.

AUD to USD Daily Chart sends bearish signals.
AUDUSD 210224 Daily Chart

4-Hourly Chart

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

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

However, a break below the 50-day EMA would bring the $0.64900 support level into play.

The 14-period 4-Hourly RSI at 57.38 suggests an AUD/USD move to the $0.66162 resistance level before entering overbought territory.

Four Hourly Chart sends bullish near-term price signals.
AUDUSD 210224 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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