The AUD/USD pair reaches a new three-week high of 0.7160s after the US PCE, ahead of Aussie GDP for Q1 Details
Posted Sunday, May 29, 2022 2:50 (AM) by- Kevin Smith
The AUD/USD pair reaches a new three-week high of 0.7160s after the US PCE, ahead of Aussie GDP for Q1

The AUD/USD pair reaches a new three-week high of 0.7160s after the US PCE, ahead of Aussie GDP for Q1

  • Australian dollar increases its weekly gain to two consecutive weeks, climbing 1.68 percent.   
  • The AUD/USD is rising thanks to the good Australian as well as US economic reports as fears of recession diminish and hopes are raised for an unaggressive US Fed.
  • This week this week, this week's US economic docket is expected to be full of activity and will include announcements of ISM PMIs, Fed speakers, and employment statistics to take in.

The Australian dollar is back at the 0.7100 mark and reaches the highest level in three weeks of 0.83 percent. At 0.7159 the AUD/USD is a reflection of the optimism of the market in the wake of the publication of the latest figures on US inflation figures, although it is decreasing in comparison to the reading from March.

Investors are ecstatic the fact that US inflation is back to below five percent and US stocks are climbing

In the days before Wall Street opened, the US Department of Commerce announced that inflationary pressures in US remain high, however, they are lower than March. Its Core Personal expenditure (PCE) which is the most-loved inflation gauge by the Fed is up 4.9 percent YoY, which is higher than the March reading of 5.1 percent. Markets reacted positively to the news and moved towards more risky assets as they resisted the idea the possibility that the Fed could pause or reduce its pace in tightening its policies.

In the same report, consumers' spending rose by 0.9 percent in April. That outperformed the consensus forecast by 0.9% due to consumers' increased purchases of both goods and services, a signal that could help sustain US economic growth in second quarter amid growing fears of recession.

In the Asian session, Australian Retail Sales for April increased by 0.9 percent, as anticipated and a gain for the fourth consecutive month showing the resilience of consumers despite a higher inflation rate of about 5.1 percent in Q1.

The announcement of positive economy data in Australia as well as the US increased risk-aversion. The result was the much-anticipated upside breakout of the AUD/USD. It cleared the previous weekly high of 0.7126. In as the North American session winds down the AUD/USD was trading in the middle of the 0.7100-0.7200 region.

In the next week in the coming week, in the coming week, Australian docket will show the Real GDP of Q1. TD Securities analysts expect them to increase by 1.2 percent, more than what they had expected. They said "Growth has likely slowed during the first quarter as activity in the economy was disrupted through an Omicron wave and the flooding that occurred throughout Queensland as well as NSW. We believe that these events are not long-lasting as domestic demand is likely to be resilient, as shown by the strong retail sales increase. We anticipate the RBA to make a more decisive policy decision in June, as the economy is on solid basis.".

In the US front The docket will present that the data for May ISM Manufacturing and business-related PMIs, Fed speakers, and employment figures.

Related blog Post