AUD to USD Forecast: Aussie Inflation, Job Ads, and China Stats in Focus

Consumer Inflation Expectations, Job Ads, and Consumer Confidence in Focus

On Monday (June 17), Australian consumer inflation expectations and job ads will influence buyer appetite for the AUD/USD.

Economists forecast consumer inflation expectations to increase from 4.1% to 4.3% in June. Upward trends in consumer inflation expectations could leave the RBA in a holding pattern in 2024.

However, job ad trends could shift the inflation outlook,

Economists expect ANZ-Indeed Job Ads to slide by 1.2% in May after jumping by 2.8% in April.

A deteriorating Australian labor market could affect wage growth and reduce disposable income. Downward trends in disposable income could impact consumer spending and dampen demand-driven inflation. Moreover, labor market conditions directly influence consumer confidence.

A slide in job ads and the prospects of weaker consumer confidence may overshadow an upswing in consumer inflation expectations, supporting a 2024 RBA rate cut.

Beyond the numbers from Australia, economic data from China will also influence buyer demand for the Aussie dollar.

China Stats and the PBoC in the Spotlight

Fixed asset investment, unemployment, industrial production, and retail sales data will warrant investor attention.

Industrial production and retail sales figures could give investors a better sense of the demand environment, barring an unexpected increase in the unemployment rate.

Economists forecast industrial production to increase 6.0% year-on-year in May after a rise of 6.7% in April.

Additionally, economists expect retail sales to rise 3.0% year-on-year after an increase of 2.3% in April.

Better-than-expected numbers could fuel buyer demand for the Aussie dollar. An improving demand environment could boost the Australian economy and the Australian dollar.

China accounts for one-third of Australian exports. Australia has a trade-to-GDP ratio above 50%. Moreover, 20% of the Australian workforce is in trade-related jobs. Higher demand from China could allow RBA staff to adjust economic projections for 2024 and 2025.

In Q1 2024, RBA Governor Michele Bullock discussed the staff projections, stating that RBA staff considered the Chinese macroeconomic environment in its forecasts.

Notably, the economic indicators from Australia and China precede the RBA interest rate decision and press conference (Tues).

US Economic Calendar: Manufacturing Sector in Focus

Later in the session on Monday, the NY Empire State Manufacturing Index will draw investor interest.

Economists forecast the NY Empire State Manufacturing Index to decline from -15.6 to -13.0 in June.

The manufacturing sector accounts for less than 30% of the US economy, and the numbers are unlikely to influence the Fed rate path. However, an unexpected slump in manufacturing sector activity could test investor expectations of a soft US landing.

Beyond the numbers, investors should monitor FOMC Member commentary. Comments regarding inflation, the economic outlook, and the timing of an interest rate cut could move the dial.

Short-Term Forecast

Near-term AUD/USD trends will hinge on the RBA press conference, US retail sales data, and preliminary Services PMI numbers. Recent Australian labor market data could enable the RBA to consider discussions about interest rate cuts. A more dovish RBA stance may tilt monetary policy divergence toward the US dollar.

AUD/USD Price Action

Daily Chart

The AUD/USD sat above the 50-day and 200-day EMAs, affirming the bullish price signals.

An Aussie dollar break above the $0.66500 handle would support a move to the $0.67003 resistance level. Furthermore, breakout from the $0.67003 resistance level could signal a move toward $0.67500.

Australian Consumer Inflation Expectations, Job ads, and economic indicators from China require attention in the morning session

Conversely, an AUD/USD drop below the 50-day EMA would bring the 200-day EMA and the $0.65760 support level into play.

With a 14-period Daily RSI reading of 48.86, the AUD may drop below the $0.65500 handle before entering oversold territory.