AUD/USD Approaches November Low with Australia GDP on Tap

Australian Dollar Outlook: AUD/USD

AUD/USD approaches the November low (0.6434) as it gives back a three-day rally, but Australia’s Gross Domestic Product (GDP) report may curb the recent decline in the exchange rate as the update is anticipated to show an uptick in economic activity.

AUD/USD Approaches November Low with Australia GDP on Tap

The depreciation in AUD/USD following the US election may persist as the Federal Reserve warns that ‘it would likely be appropriate to move gradually toward a more neutral stance of policy over time,’ and it remains to be seen if Chairman Jerome Powell and Co. will deliver another rate-cut at its last meeting for 2024 as the US Personal Consumption Expenditure (PCE) Price Index showed an uptick in both the headline and core rate of inflation.

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Meanwhile, the Reserve Bank of Australia (RBA) appears to be on track to keep the cash rate on hold over the remainder of the year as ‘members agreed that it was important to keep monetary policy sufficiently restrictive until the Board is confident that inflation is moving sustainably towards the target.’

Australia Economic Calendar

In turn, the RBA may continue to tame speculation for lower interest rates as the GDP report is anticipated to show the economy growing 0.4% in the third quarter after expanding 0.2% during the previous period, and a positive development may generate a bullish reaction in the Australia Dollar as it raises the central bank’s scope to further combat inflation.

With that said, AUD/USD may continue to hold within the yearly range should it defend the November low (0.6434), but the exchange rate may attempt to test the August low (0.6349) should the weakness following the US election persist.

AUD/USD Price Chart – Daily

Chart Prepared by David Song, Strategist; AUD/USD on TradingView

AUD/USD snaps the recent series of higher highs and lows after struggling to close back above the 0.6510 (38.2% Fibonacci retracement) to 0.6520 (23.6% Fibonacci retracement) region, with a break/close below the 0.6380 (78.6% Fibonacci retracement) to 0.6410 (50% Fibonacci extension) zone bringing the yearly low (0.6349) on the radar.
Next area of interest comes in around the 2023 low (0.6270) but AUD/USD may hold within the yearly range if it defends the 0.6380 (78.6% Fibonacci retracement) to 0.6410 (50% Fibonacci extension) zone.
Need a close the 0.6510 (38.2% Fibonacci retracement) to 0.6520 (23.6% Fibonacci retracement) region to open up the 0.6590 (38.2% Fibonacci extension) to 0.6600 (23.6% Fibonacci retracement) zone, with the next area of interest coming in around the November high (0.6688).

Additional Market Outlooks

US Dollar Forecast: USD/JPY Gives Back Post-US Election Rally

US Dollar Forecast: GBP/USD Still Vulnerable to Test of May Low

NZD/USD Rebounds Ahead of 2023 Low with RBNZ Expected to Cut

Gold Price Stages Five-Day Rally for First Time Since March

--- Written by David Song, Senior Strategist

Follow on X at @DavidJSong

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