AUD/USD GAINS SOME GROUND ON WEAK US DATA, OUTLOOK STILL NEGATIVE
The AUD/USD is trading at 0.6520, gaining 0.40, in Thursday's session.
Weak Retail Sales data from January from the US weakened the USD.
If markets continue to delay rate cuts on the Fed, the upside is limited.
On Thursday, the AUD/USD pair traded near 0.6520, marking a gain of 0.40% mainly driven by the report of weak economic data from the United States (US). However, as long as the markets bet on the Federal Reserve (Fed) delaying cuts, the pair may see further downside.
The economic health of the United States remains robust, underpinned by rejuvenated labor markets, accelerating Gross Domestic Product (GDP) growth, and sticky inflation levels. As a reaction, the US Dollar performed strongly against its rivals at the beginning of 2024, as markets started to delay the Fed’s rate cuts to June giving up hopes on a cut in the March and May meetings.
Conversely, the Australian economy has exhibited a modest performance due to persistent pressures in the labor market and tepid inflation growth. The expectation is for the Reserve Bank of Australia (RBA) to hold rates steady until August which may give the Aussie some advantage over the USD but if its economy continues weakening, the upside will be limited
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