Aussie dollar trades slightly high reflecting a broader trend of USD weakness
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Daily Currency Update
Over the past week the Australian dollar (AUD) experienced a modest appreciation against the US dollar (USD). The AUD/USD exchange rate increased by approximately 0.29%, closing the week at around 0.6426. The USD faced downward pressure due to concerns over US fiscal stability, including a sovereign credit downgrade and trade tensions with the European Union. These factors contributed to a 1.5% weekly decline in the USD, marking its worst performance in six weeks. On the local front the Reserve Bank of Australia (RBA) reduced the official cash rate by 25 basis points to 3.85%. Despite this dovish move, the AUD held steady, supported by expectations of further rate cuts and a softer inflation outlook. Looking ahead this week the AUD/USD pair is expected to continue trading within a tight range, influenced by upcoming economic data releases and global market developments.Key Movers
U.S. initial jobless claims increased by 14,000 to a seasonally adjusted total of 240,000. This marks the highest level in five weeks and slightly exceeds economists' expectations of 230,000. Despite this uptick, the labor market remains relatively stable. The four-week moving average of claims decreased to 230,750, and continuing claims—reflecting individuals receiving unemployment benefits—rose to 1.92 million, the highest since 2021 . Analysts attribute the increase in initial claims to seasonal factors, such as the end of the school year and the Memorial Day holiday, rather than a significant rise in layoffs. Overall, while there are signs of easing in the labor market, there is no clear indication of widespread job losses or a significant economic downturn. Annual inflation in the United States (US), as measured by the change in the Personal Consumption Expenditures (PCE) Price Index, declined to 2.1% in April from 2.3% in March, the US Bureau of Economic Analysis reported on Friday. This reading came in below the market expectation of 2.2%. The core PCE Price Index, which excludes volatile food and energy prices, rose 2.5% in the same period, down from the 2.7% increase reported in March and in line with analysts' estimates. The PCE Price Index and the core PCE Price Index both rose 0.1% on a monthly basis.Expected Ranges
- AUD/USD: 0.6350 - 0.6550 ▲
- AUD/EUR: 0.5600 - 0.5800 ▲
- GBP/AUD: 2.0800 - 2.1000 ▲
- AUD/NZD: 1.0700 - 1.0900 ▼
- AUD/CAD: 0.8750 - 0.8950 ▲