The Australian dollar was largely unchanged on Thursday as the market focused on the US dollar and the recent economic data from the United States and Australia. The AUD/USD pair was trading at 0.6410, much higher than the year-to-date low of 0.5918.
US economy is weakening
The AUD/USD pair fluctuated as investors responded to recent macroeconomic data from the United States. A report by The Conference Board showed that consumer confidence tumbled to 86 in April, down from over 90 the previous month.
The consumer confidence figure has been in a strong downward trend since Donald Trump became president and started doing major changes. His Department of Government Efficiency (DOGE) stated mass layoffs in some key government agencies.
At the same time, Trump implemented sweeping tariffs on all countries, with China being the worst affected. Most goods from China are now being charged a 145% tariff, leading many consumers to pay higher prices.
Data released on Wednesday showed that Trump’s actions are having a major impact on the economy. The GDP contracted by 0.3% in the first quarter, following a period of constant growth in all quarters since 2022.
Additional data revealed that the labor market is being impacted as companies reassess the impact of tariffs on their operations. The private sector added just 60k jobs in April, much lower than the expected 114,000.
At the same time, the headline Personal Consumption Expenditure (PCE), a popular inflation gauge, remained higher in March. Inflation will likely keep rising as Trump’s tariffs remain.
US consumer confidence has plummeted, while the trade deficit continued to accelerate last month as companies rushed to purchase ahead of Trump’s tariffs.
The next key AUD/USD news will be the US nonfarm payrolls (NFP) data. Economists expect the data to show that the unemployment rate remained at 4.2% in April as the economy added just 128k jobs during the month.
Australian inflation is still high
The AUD/USD exchange rate held steady this week after headline Australian inflation data came out higher than expected.
According to the statistics agency, the headline Consumer Price Index remained at 2.4% in the first quarter as accommodation costs rose. Market participants were expecting the data to show that inflation slowed to 2.3%.
The trimmed and weighted mean inflation numbers dropped to 3.0% in the March quarter, which is also higher than what analysts had expected.
Therefore, these numbers mean that the Reserve Bank of Australia will likely maintain interest rates steady in the March 20 meeting since prices remain much higher than the target of 2.0%.
AUD/USD technical analysis
AUD/USD chart by TradingView
The weekly chart indicates that the AUD/USD exchange rate reached a low of 0.5919 earlier this year and has since rebounded to the psychological level of 0.6400, its highest level since December 2022.
The pair is attempting to cross the 50-week moving average, while top oscillators like the Relative Strength Index (RSI) and the MACD have all pointed upwards.
Therefore, the pair will likely continue rising as bulls target the next key resistance level at 0.6500. A drop below the support at 0.6300 will invalidate the bullish outlook.
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