• Australian Dollar continues its losing streak as the US Dollar improves on risk aversion.
• Australian Consumer Inflation Expectations and Unemployment Rate remained consistent at 4.5% and 3.9%, respectively.
• The solid US Retail Sales data reinforced the strength of the Greenback.
• Traders’ expectations have been trimmed for the Fed’s first rate cut in March.

The Australian Dollar (AUD) extends its losing streak on Thursday that began on January 11. The robust economic data emanating on Wednesday from the United States (US) played a role in diminishing the strength of the AUD/USD pair. Furthermore, as the US military executed another series of strikes on Houthi targets in Yemen, the heightened geopolitical tensions further bolstered the inclination towards risk aversion. This, in turn, supports the demand for the US Dollar (USD) over its counterparts, including the Australian Dollar (AUD).

Australia’s moderate data released on Thursday seem to fail to provide any support for the Australian Dollar. Consumer Inflation Expectations remained steady at 4.5% in January, while the seasonally adjusted Unemployment Rate held firm at 3.9% in line with expectations for December. However, the Employment Change data revealed a decline, with the number of employed individuals decreasing by 65.1K, contrary to the anticipated increase of 17.6K.

The US Dollar Index (DXY) gains ground on upbeat US Treasury yields, which could be attributed to the better-than-expected US economic data. US Retail Sales (MoM) rose by 0.6% in December, exceeding the market consensus of 0.4 and 0.3% prior.

US Retail Sales Control Group improved to 0.8% from the previous reading of 0.5%. Moreover, Retail Sales ex Autos (MoM), excluding the key sector of motor vehicles and parts, grew by 0.4% as compared to the market anticipation of remaining consistent at 0.2%. Traders will likely watch the US housing data on Thursday.

The US Dollar cheers the investors’ sentiment as they have scaled back their expectations for the Federal Reserve's (Fed) first rate cut in March. The probability of a rate cut has decreased to 57%, a significant drop from over 70%.

Daily Digest Market Movers: Australian Dollar continues to lose ground on risk aversion

• Australia's Consumer Confidence declined by 1.3% in January as compared to the previous increase of 2.7%.
• Australian TD Securities inflation increased by 5.2% YoY in December from 4.4% in November.
• Australia's job advertisements improved by 0.1% in December, swinging from the previous decline of 4.6%.
• China’s annual Gross Domestic Product (GDP) grew by 5.2% against the 5.3% expected in the fourth quarter.
• Chinese December’s Industrial Production (YoY) increased by 6.8%. which was expected to remain consistent at 6.6%.
• China’s Retail Sales year-over-year came at 7.4%, falling short of the market consensus of 8.0%.
• China’s Premier Li Qiang stated on Tuesday that China's economy grew by approximately 5.2% in 2023.
• Federal Reserve Governor Christopher Waller cautioned that, despite positive developments in the inflation outlook, the central bank is not rushing to outline plans for rate cuts.
• Atlanta Fed President Raphael Bostic also suggested over the weekend that premature interest rate cuts could lead to inflation fluctuations. Bostic emphasized that the deceleration of inflation towards the central bank's 2.0% target was expected to slow down in the coming months.
• US NY Empire State Manufacturing Index saw a significant decline, dropping to -43.7 in January, well below the expected improvement to -5.