The Australian Dollar strengthened against the US Dollar on Thursday, with the AUD/USD pair trading at 0.7200, up 0.44% on the day, following comments from Federal Reserve Governor Waller that were interpreted as moderately dovish ahead of the September FOMC meeting [1]. Waller expressed support for keeping rates steady, contingent on continued disinflation, but warned that a strong US CPI report next week could prompt a rate hike [1].
The US Dollar Index (DXY), which measures the greenback against a basket of six major currencies, fell 0.58% to 99.00, pressured by both Waller's comments and a rate check from Tokyo that sent USD/JPY lower [1]. Meanwhile, the US ISM Services PMI improved from 54.1 to 55.4 in August, surpassing forecasts, and the prices paid sub-component rose to 72.6 from 70.3, indicating persistent inflationary pressures [1]. Initial Jobless Claims for the week ending August 29 edged up to 206,000, slightly above estimates of 205,000 [1].
Market expectations for a 25 basis point rate hike by the Federal Reserve at the September meeting were trimmed from 64% to 54%, while the probability of holding rates steady increased to 46%, according to Prime Terminal data [1]. Traders are now focused on the upcoming release of August's Nonfarm Payrolls and the Unemployment Rate for further direction [1].
From a technical perspective, AUD/USD maintains a bullish near-term tone, trading above key moving averages and trend line supports, with the Relative Strength Index at 66.14, suggesting upbeat momentum without overbought conditions [1]. The pair remains capped by a longer-term downward resistance trend line, with initial support at 0.7198 and further support clustered near 0.7032 [1].
CONCLUSION
The Australian Dollar's advance was driven by a combination of dovish signals from the Fed and a broad-based US Dollar sell-off. Market participants are recalibrating expectations for US rate hikes, with attention now turning to upcoming US economic data for further guidance. Technical indicators suggest AUD/USD retains a bullish bias in the near term.