Australian Dollar recovers as Fed Powell worries about easing US job market strength

• 
  The
  Australian
  Dollar
  recovers
  losses
  as
  the
  US
  Dollar
  edges
  lower
  on
  Wednesday.
• 
  China’s
  CPI
  declined
  by
  0.2%
  in
  June,
  compared
  to
  a
  0.1%
  decline
  in
  May.
• 
  Powell
  emphasized
  that
  a
  rate
  cut
  is
  not
  appropriate
  until
  the
  Fed
  gains
  confidence
  that
  inflation
  is
  moving
  toward
  2%.

The
Australian
Dollar
(AUD)
recovers
its
daily
losses
and
returns
in
its
sideways
auction
below
0.6750 in Wednesday’s
early
European
session.
However,
the

AUD/USD
pair
faced
challenges
following

Federal
Reserve
(Fed)
Chairman
Jerome
Powell’s
testimony
before
the
US
Congress
on
Tuesday.
Despite
acknowledging
improving
inflation
figures,
the
Fed
remains
firmly
cautious.

The
AUD
may
struggle
as
the
Consumer
Price
Index
(CPI)
in
Australia’s
close
trade
partner
China, rose
at
an
annual
rate
of
0.2%
in
June,
down
from
a
0.3%
rise
in
May.
The
market
had
forecasted
a
0.4%
increase
for
the
period.
On
a
monthly
basis,
Chinese
CPI
inflation
declined
by
0.2%
in
June,
compared
to
a
0.1%
decline
in
May,
which
came
in
below
the
expected
decline
of
0.1%.

Traders
are
anticipating
the
second
semi-annual
testimony
by
Fed
Chair
Jerome
Powell,
as
well
as
speeches
by
the
Fed’s
Michelle
Bowman
and
Austan
Goolsbee.
Additionally,
attention
will
be
on
the
US
Consumer
Price
Index
(CPI)
data,
set
to
be
released
on
Thursday.

Market
forecasts
generally
predict
that
the
annualized
US
core
CPI
for
the
year
ending
in
June
will
remain
steady
at
3.4%,
while
headline
CPI
inflation
is
expected
to
increase
to
0.1%
month-over-month
in
June,
compared
to
the
previous
flat
reading
of
0.0%.

Daily
Digest
Market
Movers:
Australian
Dollar
consolidates
as
Fed
Powell
reiterates
need
for
more
good
inflation
data

• Fed
  Chair
  Jerome
  Powell
  answered
  questions
  before
  the
  Senate
  Banking
  Committee
  on
  the
  first
  day
  of
  his
  Congressional
  testimony
  on
  Tuesday.
  Powell
  stated,
  “More
  good
  data
  would
  strengthen
  our
  confidence
  in
  inflation.”
  He
  emphasized
  that
  a
  “policy
  rate
  cut
  is
  not
  appropriate
  until
  the
  Fed
  gains
  greater
  confidence
  that
  inflation
  is
  headed
  sustainably
  toward
  2%.”
  He
  also
  noted
  that
  “first-quarter
  data
  did
  not
  support
  the
  greater
  confidence
  in
  the
  inflation
  path
  that
  the
  Fed
  needs
  to
  cut
  rates.”
• Australia’s
  10-year
  government
  bond
  yield
  hold
  steady
  at
  around
  4.4%
  as
  investors
  digest
  mixed
  domestic
  data.
  Consumer
  sentiment
  fell
  in
  July
  following
  a
  rise
  in
  June,
  reflecting
  household
  concerns
  over
  persistent
  inflation
  and
  the
  potential
  for
  further
  interest
  rate
  increases
  by
  the
  Reserve
  Bank
  of
  Australia
  (RBA).
  Meanwhile,
  business
  confidence
  rose
  to
  its
  highest
  level
  since
  January
  2023.
• Australia’s
  Westpac
  Consumer
  Confidence
  dropped
  by
  1.1%
  in
  July,
  reversing
  the
  1.7%
  increase
  seen
  in
  June.
  This
  marks
  the
  fifth
  decline
  in
  2024,
  driven
  by
  ongoing
  worries
  about
  high
  inflation,
  elevated
  interest
  rates,
  and
  a
  sluggish
  economy.
• US
  Nonfarm
  Payrolls
  (NFP)
  increased
  by
  206,000
  in
  June,
  following
  a
  rise
  of
  218,000
  in
  May.
  This
  figure
  surpassed
  the
  market
  expectation
  of
  190,000.
• The
  US
  Unemployment
  Rate
  edged
  up
  to
  4.1%
  in
  June
  from
  4.0%
  in
  May.
  Meanwhile,
  Average
  Hourly
  Earnings
  decreased
  to
  3.9%
  year-over-year
  in
  June
  from
  the
  previous
  reading
  of
  4.1%,
  aligning
  with
  market
  expectations.

Technical
Analysis:
Australian
Dollar
trades
sideways
near 0.6750

The
Australian
Dollar
trades
around
0.6740
on
Wednesday.
The
analysis
of
the
daily
chart
shows
that
the
AUD/USD
pair
consolidates
within
an
ascending
channel,
indicating
a
bullish
bias.
Additionally,
the
14-day
Relative
Strength
Index
(RSI)
remains
above
the
50
level,
confirming
the
bullish
momentum.

The
AUD/USD
pair
may
test
the
upper
boundary
of
the
ascending
channel
at
approximately
0.6775.
If
it
breaks
through
this
level,
the
pair
could
aim
for
the
psychological
level
of
0.6800.

On
the
downside,
the
AUD/USD
pair
may
find
support
around
the
lower
boundary
of
the
ascending
channel
at
0.6670,
with
additional
support
near
the
50-day
Exponential
Moving
Average
(EMA)
at
0.6642.
A
break
below
this
level
could
push
the
pair
toward
throwback
support
around
0.6590.

AUD/USD:
Daily
Chart