This Week: AUDUSD slightly rebounds towards 100-period SMA

The Australian dollar is the second worst-performing G10 currency (the worst being JPY) against the US dollar so far in 2024.

Bloomberg’s FX model now shows a 72% chance that AUDUSD will trade between 0.6433 and 0.6618 in a week where traders are set to react to US and Aussie central bankers.

AUDUSD traders are set to weaken the currency belonging to the central bank (Fed vs. RBA) that’s closer to a rate cut.

With the Aussie still reeling from year-to-date declines against most of its G10 peers (except JPY), bouts of risk-off sentiment may also keep AUD bears in control this week.

Events Watchlist:
 

• Monday - Wednesday, February 5-7th: Fed speak

At least 5 different Fed officials are slated to make public speeches, just days after Fed Chair Jerome Powell said that a US rate cut in March is unlikely. However, if any of these central bankers actually crack the door open for the Fed to lower its rates this quarter, that could allow AUDUSD to rebound towards the 0.6600 level.
 

• Tuesday, February 6th: Reserve Bank of Australia (RBA) rate decision

Markets are forecasting a lowly 21% chance that the RBA will lower its Cash Rate Target this week.  Traders will be more reactive to what RBA Governor Michele Bullock may signal about potential rate cuts in the months ahead. AUDUSD may sink closer to 0.64600 if policymakers lean towards a rate cut within the first half of 2024.
 

• Friday, February 9th: US CPI revisions

Investors are wary of any surprises out of this annual revision to the consumer price index (CPI), which looks back at the inflation data over the past 5 years. If the revised figures suggest that US inflation is not slowing as fast as expected, diluting bets for Fed rate cuts, that may extend AUDUSD’s year-to-date declines closer to 5%.

Here’s a comprehensive list of other key economic data and events due this week:

Monday, February 5

• AUD: Australia December trade balance; January inflation
   
• CNH: China January PMIs
   
• EUR: Eurozone December PPI, February investor confidence; Germany December trade balance
   
• USD: Speech by Atlanta Fed President Raphael Bostic
   

Tuesday, February 6

• AUD: RBA rate decision; 4Q retail sales
   
• EUR: Eurozone December retail sales; Germany December factory orders
   
• USD: Speeches by Cleveland Fed President Loretta Mester and Philadelphia Fed President Patrick Harker
   

Wednesday, February 7

• NZD: New Zealand 4Q unemployment rate
   
• EUR: Germany December industrial production
   
• USD: Speeches by Fed Governor Adriana Kugler and Richmond Fed President Tom Barkin
   
• Walt Disney earnings
   

Thursday, February 8

• CNH: China January CPI and PPI
   
• USD: US weekly initial jobless claims; speech by US Treasury Secretary Janet Yellen
   

Friday, February 9

• EUR: Germany January CPI (final)
   
• CAD: Canada January unemployment rate
   
• USD: CPI revisions