As the US economy continues to show signs of shifting momentum, investor interest is expected to focus on the upcoming release of monthly US producer prices and weekly jobless claims data. Economists are forecasting a slight increase in producer prices in May, following a rise in April. Additionally, core producer prices are expected to advance as well. Any deviation from these forecasts could potentially influence investor speculation on a possible Fed rate cut in September.
With a projected increase in initial jobless claims, concerns over weakening labor market conditions may arise. This could impact wage growth and subsequently reduce disposable income, potentially affecting consumer spending patterns. A higher-than-expected rise in jobless claims could further fuel expectations of a Fed rate cut in September, as it could signal a need for central bank intervention to stabilize the economy.
The impending economic data releases in the US are likely to have a significant impact on the AUD/USD currency pair. Any indication of softer producer prices paired with weaker labor market conditions could shift monetary policy divergence in favor of the Australian dollar. However, it is essential for Australian labor market data to align with or exceed expectations in order to sustain buyer interest in the Aussie dollar.
From a technical standpoint, the AUD/USD pair has shown strength by remaining above the 50-day and 200-day Exponential Moving Averages (EMAs). A breakout above the $0.67003 resistance level could pave the way for a climb towards the $0.67500 handle. Further upward momentum could push the pair to test the $0.67967 resistance level. Conversely, a drop below the $0.66500 threshold could give bearish traders an opportunity to challenge the 50-day EMA support level.
Considerations for Investors
In addition to economic data releases, investor sentiment may also be influenced by FOMC member commentary, with Fed Vice Chair John Williams scheduled to speak. Views on inflation, economic outlook, and the future path of interest rates could play a crucial role in shaping market expectations. As investors weigh the potential impact of the data releases and central bank communication, the AUD/USD trend is likely to experience volatility in the near term.