Australian Dollar Forecast: Ai Group Industry Index and RBA Rate Path in Focus

Ai Group Industry Index in Focus

On Wednesday, October 2, the Ai Group Industry Index may influence buyer appetite for the AUD/USD. Economists forecast the Ai Group Industry Index to increase from -23.5 in August to -10.0 in September.

Economists view the Index as a barometer for the Australian economy. Notably, the survey results from companies across various sectors, including construction, mining, manufacturing, and services, dictate trends. Components of the survey include employment, new orders, and production levels.

Improving trends in the Index could signal a pickup in job creation, spending, and business investment.

Considering the RBA rate path, tighter labor market conditions may boost wages and consumer spending, possibly fueling demand-driven inflation. A higher inflation outlook would align with the RBA’s view on inflation, possibly putting a rate cut on ice until 2025. Furthermore, better-than-expected numbers could support the AUD/USD move toward $0.70.

Expert Views on the RBA Rate Path

AMP’s Head of Investment Strategy and Chief Economist, Shane Oliver, commented on the recent Aussie CPI data, stating,

“Our base case remains for a first RBA cut in Feb (after Q3 & Q4 CPIs confirm falling inflation, but the chance of an earlier move is high.”

The latest RBA Statement indicated softer inflation could be temporary, with inflation unlikely to return sustainably to target until 2026. A stronger Ai Group Industry Index may reinforce the RBA’s inflation outlook.

US Economic Calendar: ADP Employment Change Pivotal for the US Dollar

Later in the Wednesday session, investors will focus on US labor market data. Economists predict the ADP will report a 120k increase in employment in September, up from 99k in August.

Stronger figures could fuel expectations of a soft US economic landing. An increase in hiring could support wage growth, possibly driving consumer spending. A pickup in consumer spending could bolster the US economy as private consumption accounts for over 60% of GDP.

Better-than-expected numbers could drag the AUD/USD toward $0.68500. However, weaker US employment may support an AUD/USD move toward $0.70.

Short-Term Forecast for AUD/USD

Near-term AUD/USD trends will likely hinge on US labor market indicators and central bank commentary. Positive US employment numbers could temper expectations of aggressive Fed rate cuts, possibly signaling an AUD/USD drop toward $0.68500. Conversely, weaker figures could boost bets on a 50-basis point Fed rate cut, potentially pushing the AUD/USD toward $0.70.

Investors should closely monitor central bank signals and economic indicators, which could influence AUD/USD trends. Traders should monitor real-time data, news updates, and expert commentary to adjust their trading strategies accordingly.

AUD/USD Technical Analysis

Daily Chart: AUD/USD Breakout Intact

The AUD/USD remains comfortably above the 50-day and 200-day EMAs, confirming bullish price trends.

A return to the September 30 high of $0.69411 could give the bulls a run at the $0.70 level. Furthermore, a breakout from $0.70 may signal a move toward the $0.70500 level.

Traders should consider Aussie stats, US labor market data, and central bank commentary, which may influence AUD/USD price movements.

Conversely, a drop below $0.68500 could give the bears a run at the $0.68006 support level.

With a 14-period Daily RSI reading of 61.58, the Aussie dollar may climb to $0.69500 before entering overbought territory.