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CAFX Market Update 12/02/2024

Welcome to our daily market update, where we help keep you informed on the latest happenings in the world of FX.
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The AUD/USD pair saw an uptick in the final trading day of the previous week, reversing a 0.53% loss on Thursday. At the time of writing, the AUD/USD pair is trading at 0.6522, up 0.09% on the day.

However, early Asian session trading shows the pair remaining somewhat defensive, partly due to light trading volumes with the Lunar New Year holidays. Against this backdrop, market participants are closely monitoring the prevailing sentiment.

The release of US January CPI data scheduled for Wednesday is highly anticipated. Particularly in light of recent remarks from several Fed officials stressing the need for further evidence of progress on inflation before considering rate cuts.

US CPI is expected to report an increase of 0.2% MoM and 2.9% YoY. The Core CPI figure is projected to show an increase of 0.3% MoM and 3.8% YoY.

Locally, the release of consumer confidence data on Tuesday and employment figures on Thursday could influence the RBA’s rate trajectory. 

A rise in consumer confidence may signal an upturn in consumer spending. Nonetheless, the condition of the Aussie labour market remains crucial for disposable income and overall consumer spending patterns. January’s employment numbers will be closely watched to determine whether December’s reduction in full-time jobs was an isolated occurrence or indicative of a broader trend that could reshape the RBA’s policy outlook.

Apart from economic data releases, investor attention will also be on various Fed speakers throughout the week, including Bowman and Barkin scheduled to speak overnight. A deviation from the script regarding cutting rates too early could pressure the AUD/USD pairing. 


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