Australian Dollar pulls back from six-month highs

• 
  The
  Australian
  Dollar
  declines
  possibly
  due
  to
  risk
  aversion
  on
  Friday.
• 
  The
  AUD
  may
  limit
  its
  downside
  due
  to
  rising
  expectations
  of
  the
  RBA
  maintaining
  a
  hawkish
  stance.
• 
  Fed’s
  Goolsbee
  stated
  that
  the
  US
  economy
  appears
  to
  be
  on
  track
  to
  achieve
  2%
  inflation.

The
Australian
Dollar
(AUD)
continues
to
retreat
on
Friday
after
reaching
a
six-month
high
of
0.6798
in
the
previous
session.
The

AUD/USD
pair
found
support
as
the
US
Dollar
(USD)
weakened
following
softer-than-expected
US
Consumer
Price
Index
(CPI)
data
in
June.
This
has
increased
expectations
of
a
potential
Federal
Reserve
(Fed)
rate
cut
in
September.

The
AUD
may
limit
its
downside
as
speculation
grows
that
the
Reserve
Bank
of
Australia
(RBA)
might
delay
the
global
rate-cutting
cycle
or
even
raise
interest
rates
again.
Persistently
high
inflation
in
Australia
prompts the
RBA
to
maintain
a
hawkish
stance.

The
US
Dollar
(USD)
remains
subdued
amid
lower
US
Treasury
yields.
Investors
in
the
fed
funds
futures
market
have
increased
their
bets
on
a
rate
cut
by
the
US

Federal
Reserve
starting
in
September.
According
to
CME
Group’s
FedWatch
Tool,
markets
are
now
pricing
in
nearly
89%
odds
of
a
rate
cut
at
the
September
Fed
meeting,
up
from
73%
on
Wednesday.

Daily
Digest
Market
Movers:
Australian
Dollar
edges
lower
due
to
risk
aversion

• Federal
  Reserve
  Bank
  of
  Chicago
  President
  Austan
  Goolsbee
  said
  on
  Thursday
  that
  the
  US
  economy
  appears
  to
  be
  on
  track
  to
  achieve
  2%
  inflation.
  This
  suggests
  Goolsbee
  is
  gaining
  confidence
  that
  the
  time
  for
  cutting
  interest
  rates
  may
  soon
  be
  approaching.
  He
  also
  stated
  “My
  view
  is,
  this
  is
  what
  the
  path
  to
  2%
  looks
  like,”
  Goolsbee
  said,
  according
  to
  Reuters.
• The
  US
  Consumer
  Price
  Index
  (CPI)
  declined
  by
  0.1%
  month-over-month
  in
  June,
  marking
  its
  lowest
  level
  in
  more
  than
  three
  years.
  On
  a
  yearly
  basis,
  the
  headline
  CPI
  increased
  by
  3.0%
  in
  June,
  down
  from
  a
  3.3%
  rise
  in
  May
  and
  below
  the
  market
  consensus
  of
  3.1%.
• The
  core
  CPI,
  which
  excludes
  volatile
  food
  and
  energy
  prices,
  rose
  by
  3.3%
  year-over-year
  in
  June,
  compared
  to
  May’s
  increase
  of
  3.4%
  and
  the
  same
  expectation.
  Meanwhile,
  the
  core
  CPI
  increased
  by
  0.1%
  month-over-month,
  against
  the
  expected
  and
  prior
  reading
  of
  0.2%.
• Australia’s
  Consumer
  Inflation
  Expectations
  for
  July
  came
  in
  at
  4.3%,
  slightly
  lower
  than
  the
  previous
  reading
  of
  4.4%.
• Federal
  Reserve
  Board
  Governor
  Lisa
  Cook
  stated
  on
  Wednesday,
  “My
  baseline
  forecast…is
  that
  inflation
  will
  continue
  to
  move
  toward
  target
  over
  time,
  without
  much
  further
  rise
  in
  unemployment,”
  according
  to
  Reuters.
• On
  Wednesday,
  Fed
  Chair
  Jerome
  Powell
  emphasized
  the
  need
  to
  closely
  monitor
  the
  labor
  market,
  noting
  that
  it
  has
  significantly
  deteriorated.
  Additionally,
  Powell
  expressed
  confidence
  in
  the
  downward
  movement
  of
  inflation.
• On
  Tuesday,
  Fed
  Chair
  Jerome
  Powell
  answered
  questions
  before
  the
  Senate
  Banking
  Committee
  on
  the
  first
  day
  of
  his
  Congressional
  testimony.
  Powell
  stated,
  “More
  good
  data
  would
  strengthen
  our
  confidence
  in
  inflation.”
  He
  emphasized
  that
  a
  “policy
  rate
  cut
  is
  inappropriate
  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.”

Technical
Analysis:
Australian
Dollar
hovers
around
0.6750

The
Australian
Dollar
trades
around
0.6760
on
Friday.
The
analysis
of
the
daily
chart
shows
that
the
AUD/USD
pair
consolidates
within
an
ascending
channel,
indicating
a
bullish
bias.
Furthermore,
the
14-day
Relative
Strength
Index
(RSI)
remains
above
the
50
level,
confirming
the
ongoing
bullish
momentum.

The
AUD/USD
pair
may
retest
the
upper
boundary
of
the
ascending
channel
at
approximately
0.6790
and
the
psychological
level
of
0.6800.

On
the
downside,
the
AUD/USD
pair
may
find
support
around
the
50-day
Exponential
Moving
Average
(EMA)
at
0.6698.
Further
support
appears
around
the
lower
boundary
of
the
ascending
channel
at
0.6680.
A
break
below
this
level
could
push
the
pair
toward
the
throwback
support
around
0.6590.

AUD/USD:
Daily
Chart