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CAFX Market Update 08/02/2024

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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In the late European session, the AUD/USD pair made a sustained upward move above the 0.6500 level amid positive market sentiment. However, the pair encountered resistance at 0.6540 and failed to break through. Confirmation of bearish rejection with a negative closing could trigger a retreat towards 0.6470 levels.

On the flip side, if the Aussie dollar mounts a comeback, the first hurdle on the road to recovery merges at the 0.6550 level.

Fed’s Kugler voiced optimism about the ongoing reduction in inflation at a Brookings event earlier this morning, yet added that policymakers require further assurance before considering easing rates.

The US dollar (DXY Index) remained largely flat, trading slightly below the 104 level yesterday. This lack of clear direction coincides with traders awaiting fresh data that could offer insights into the Federal Reserve’s monetary policy trajectory. The upcoming US inflation report, scheduled for next Wednesday, will be the next major driver of market volatility.

Today’s focus lies on the anticipated release of China’s Consumer Price Index (CPI) data for January. Markets project that the Chinese economy was deflated by a higher pace of 0.5% against the -0.3% figure in December. With the Aussie dollar being a proxy for China’s economic conditions, indications of deflation in China will likely place downward pressure on the Aussie. 


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