Australian Dollar on the rise amid Greenback weakness

• AUD/USD rises due to a weaker US Dollar following a 50-basis-point rate cut by the Federal Reserve.
• Fed anticipates slower GDP growth and higher unemployment, while inflation is expected to decline.
• RBA hawkish stance also favors the Aussie.

The AUD/USD rose by 0.70% to 0.6815 in Thursday's session. This marks the fourth consecutive session of gains for the AUD/USD, as the Greenback continues to weaken in the wake of the Federal Reserve's (Fed) 50-basis-point rate cut. The Fed's decision to cut rates was driven by concerns about slowing global economic growth and rising unemployment.

Economic projections for Australia remain uncertain. Despite mixed indicators, the Reserve Bank of Australia (RBA) remains cautious due to elevated inflation. As a result, financial markets currently anticipate a modest 25-basis-point reduction in interest rates in 2024, reflecting the RBA's intention to maintain a hawkish monetary stance to combat inflationary pressures.

Daily digest market movers: Australian Dollar rising while markets punish the USD after Fed, Australian labor data

• The US dollar (USD) weakened on Thursday due to increased selling interest after the Federal Reserve's decision to lower interest rates more than expected.
• Gains in copper and iron ore prices also supported the AUD, although concerns about China's housing and industrial sectors may limit upside potential.
• The Reserve Bank of Australia (RBA) kept its Official Cash Rate (OCR) steady at 4.35% last month, indicating a cautious approach amid ongoing inflationary pressures.
• RBA Governor Michelle Bullock reiterated a cautious outlook, suggesting that rate cuts are unlikely in the near future.
• Despite the RBA's hawkish stance, the market anticipates rate cuts in late 2024, with a 70% probability of a 25-basis-point cut by December.
• A mixed labour market report in Australia for August showed an unchanged Unemployment Rate of 4.2%, while Employment Change increased by 47.5K individuals.

AUD/USD technical outlook: Pair embraces bullish bias indicators positive

Indicators continue to gain ground with the Relative Strength Index (RSI) and the Moving Average Convergence Divergence (MACD) indicating rising buying traction. In addition, with the pair at its highest level since January, the outlook is positive. Buyers now must retain the 0.6800 area.