USD to AUD Rate Stuck in 1-Cent Range After Wage Price Index

The USD to AUD rate has been bouncing in a 1 cent range for 2 weeks, suck between 2 daily MAs, and last night’s Wage Price Index couldn’t break the range. This forex pair experienced a reversal in April after initially dropping nearly 3 cents. This turnaround coincided with a series of negative developments for the USD.

AUD/USD Chart Daily – Bouncing Between the 100 and 200 SMAs

As the exchange rate climbed, it surpassed most of the moving averages on the daily chart, which have turned into support now, while the 200SMA remains as resistance, keeping the price rangebound. Additionally, improved risk sentiment bolstered the Australian Dollar’s strength, contributing further to the pair’s advance and pushing AUD/USD above the 200-day SMA.

The US dollar is facing downward pressure in response to recent events, including Chairman Powell’s rejection of interest rate hikes during the last FOMC meeting and the disappointing April Non-Farm Payrolls report. Yesterday, the AUD/USD initially dropped due to dollar purchasing linked to PPI, but quickly rebounded.

Dollar sellers were encouraged by Chairman Powell’s comments later in the day, which echoed sentiments expressed after the FOMC rate decision the previous week, reinforcing perceptions of a less hawkish Fed Chair. Despite the AUD/USD’s upward movement, it remains trading between two moving averages. Buyers are eyeing a key resistance area between 0.6640-50

Australia Wage Price Index for Q1

• The Australia Wage Price Index for Q1 showed a year-on-year increase of 4.1%, slightly below the expected 4.2% and unchanged from the previous quarter’s figure of 4.2%.
• On a quarterly basis, the Wage Price Index rose by 0.8%, also slightly below expectations of 0.9%, and consistent with the previous quarter’s figure of 0.9%.

Overall, while the wage growth remains robust, the slight moderation in the quarterly and yearly figures suggests some stabilization in wage pressures. The year-on-year result of 4.1% for the Australia Wage Price Index contrasts favorably with the Australian budget’s prediction of 4% growth this year and the Reserve Bank of Australia’s forecast of 4.2%. This suggests that there are currently no signs of out-of-control pay increases.

AUD/USD Live Chart