The Australian Dollar dipped to 0.6215 during a quiet Friday session.
Year-End Lull Impact
The year-end lull has made the markets very subdued. The Aussie is having a hard time finding its direction as global market activity is quiet. Traders are mostly focused on the New Year festivities. Thin liquidity and uncertainties about policies are making the currency weaker.
Daily Digest of Market Movers
Fed’s Rate Cut and Outlook
In December, the US Federal Reserve cut rates by 25 basis points. But Chair Jerome Powell said they would be cautious about further easing since inflation is still stubborn. Also, the bank now expects fewer cuts in 2025 than earlier thought.
Trump’s Policies Impact
Potential new tariffs under the incoming Trump administration could make prices go up. This might slow down the Fed’s rate reductions in 2025. Market participants are thinking about Trump’s proposed deregulation, tax cuts, and possible tariff hikes. These things could boost US growth and inflation, which would make the US Dollar stronger.
RBA’s Stance
The Australian Dollar is under pressure because the RBA minutes show that officials are confident about easing inflation. This could lead to potential rate cuts as soon as February. RBA Governor Michele Bullock said they’ll take a data-driven approach and there wasn’t an explicit discussion of a February rate cut, but the odds of it happening are 65%.
AUD/USD Technical Outlook
Price Movement and Indicators
The AUD/USD went down to 0.6215 on Friday. It’s hovering close to its yearly low. The Relative Strength Index (RSI) is at 27, which means it’s in deeper oversold territory and has a bit of a downward bias. The Moving Average Convergence Divergence (MACD) histogram shows flat red bars, indicating that there’s still selling pressure.
Holiday Trading Effect
Even though the pair has lost a lot already, the thin holiday trading volumes might stop any big moves. So, the Aussie is still at risk of going down further without a clear reason to change things.
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