The Australian dollar rises as consumer confidence recorded its first increase in four months

• The Australian dollar rose due to an improvement in the consumer confidence index released on Tuesday.
• Australian Westpac consumer confidence rose 1.7% month-on-month in June, hitting the highest level since February.
• The US dollar may limit its downward trend; Strong US business activity data dampened expectations for a rate cut from the Federal Reserve.

The Australian Dollar (AUD) rose due to an improvement in the Australian Westpac Consumer Confidence Index, which was released on Tuesday. In addition, the AUD/USD pair is receiving support from the hawkish stance of the Reserve Bank of Australia (RBA). However, investors are likely to be cautious ahead of Australian inflation data this week.

Governor of the Reserve Bank of Australia Michelle Bullock She said during her recent press conference that the board discussed potential rate hikes, ruling out considerations of a near-term rate cut, according to ABC News. Markets have significantly lowered their expectations for a rate cut by the Reserve Bank of Australia this year, with relief not expected until April next year.

The US dollar is trading on a softer tone ahead of the main US dollar Economic data Scheduled for later this week. The revised US GDP for the first quarter (Q1) is scheduled to be released on Thursday, followed by the personal consumption expenditures (PCE) price index on Friday.

Daily Summary Market Drivers: The Australian dollar rose on improving consumer sentiment

• According to Bloomberg, Chinese Premier Li Qiang expressed confidence that China is able to achieve the full-year growth target of around 5%. Chiang warned that decoupling and protectionism would only increase economic operating costs globally. Any change in the Chinese economy could affect the Australian market, as China and Australia are close trading partners.
• On Tuesday, the People’s Bank of China injected 300 billion yuan through seven-day reverse repurchase agreements, keeping the reverse repo rate at 1.8%.
• Australian Westpac consumer confidence rose 1.7% month-on-month in June, rebounding from a 0.3% decline in the previous month. This represents the first increase in four months and the highest level since February.
• According to the CME FedWatch tool, investors expect roughly 67.7% odds of a Fed rate cut in September, compared to 61.5% the week before.
• On Friday, the US composite PMI for June beat expectations, rising to 54.6 from May’s reading of 54.5. This figure represents the highest level since April 2022. The manufacturing PMI rose to a reading of 51.7 from 51.3, beating expectations of 51.0. Likewise, the services PMI rose to 55.1 from 54.8 in May, beating the consensus estimate of 53.7.
• According to a Reuters report, Minneapolis Fed President Neel Kashkari indicated on Thursday that it could take a year or two to bring inflation back to 2%.

Technical Analysis: The Australian dollar is hovering around the 0.6650 level

The Australian dollar is trading around 0.6650 on Tuesday. analysis Daily Schedule The AUD/USD pair is showing a neutral bias as it is consolidating inside a rectangular formation. The 14-day RSI is just above the 50 level, indicating a potential bullish bias.

AUD/USD may find support around the 50-day Exponential Moving Average (EMA) at 0.6615, with additional support near 0.6585, marking the lower border of the rectangle formation.

On the top side, Australian Dollar/US Dollar The pair may face resistance near the upper border of the rectangular formation around 0.6695, aligned with the psychological level of 0.6700. Furthermore, potential resistance levels include the highest level at 0.6714 recorded since January.

AUD/USD: daily chart