Wall Street finished with gains, while US Treasury yields dropped. Consequently, that undermined the US Dollar, which was left adrift to an anemic economic calendar. The Dallas Fed Manufacturing Index in April was at -14.5 vs. -14.4 in March. The data was ignored by market participants, which are focused on the Federal Reserve’s monetary policy decision on May 1.
The US central bank is expected to hold rates unchanged, following hawkish remarks by Fed Chairman Jerome Powell, who commented that the “lack of progress on inflation” would be a reason to keep rates higher for longer. After that, the swaps market had priced out 5 rate cuts from the six foreseen by traders at the beginning of 2024.
Futures data from the Chicago Board of Trade (CBOT) shows that market participants estimate a full 25 basis points (bps) rate cut by the end of the year.
Aside from this, Australia’s economic docket will feature March’s Retail Sales, which are expected to dip from 0.3% to 0.2% MoM, indicating further weakness. If the number comes as expected, the AUD/USD could drag lower, but after breaching the 200-day moving average (DMA) of 0.6524, that could be seen as the first support. Otherwise, an upbeat result could underpin the Aussie, as strong sales would mean the Reserve Bank of Australia (RBA) must keep rates at the current level
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