**AUD/USD Registers New Yearly High: Key Drivers, Technical Analysis, and Outlook**
*Based on original reporting by Matt Weller, FOREX.com, and additional market research*
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**Introduction: AUD/USD Climbs to Fresh 2024 High**
In recent days, the Australian dollar (AUD) has demonstrated noteworthy strength against the US dollar (USD), pushing the AUD/USD currency pair to new yearly highs. After bouncing from June’s low, the pair capitalized on a combination of robust Australian data, shifting sentiment around the Federal Reserve’s monetary policy, and improving risk appetite globally. This article delves into the factors behind this rally, the technical backdrop, and the outlook for the currency pair going forward. The discussion is based on analysis by Matt Weller from FOREX.com, supplemented by insights from the wider forex research community.
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**Major Factors Fueling the AUD/USD Advance**
Several fundamental and macroeconomic themes have underpinned the recent uptrend in the AUD/USD pair. Here are the main drivers:
– **Central Bank Policy Divergence**
– Market expectations have shifted toward a less aggressive monetary stance from the Federal Reserve for the second half of 2024, weakening the US dollar.
– The Reserve Bank of Australia (RBA) has maintained a cautious, data-dependent approach, but sticky inflation and resilient labor market data in Australia have led traders to scale back expectations for near-term rate cuts.
– **Australian Economic Data Strength**
– Recent economic releases from Australia have surprised to the upside, supporting the AUD.
– May’s employment report showed the addition of 39,700 jobs, outpacing expectations and reducing the unemployment rate to 4.0 percent.
– The monthly Consumer Price Index (CPI) inflation print came in at 4 percent year-on-year, higher than anticipated, raising the odds of the RBA maintaining a tighter policy stance.
– Australian retail sales also provided a boost, increasing 0.6 percent in May, above the forecasted 0.3 percent.
– **Elevated Commodity Prices**
– As a major exporter of commodities such as iron ore, coal, and gold, Australia’s terms of trade benefit from rising commodity prices.
– Prices have remained buoyant due to ongoing supply constraints, Chinese stimulus measures aimed at supporting the property sector, and expectations for stronger global demand in late 2024.
– **Risk-On Sentiment**
– Global risk assets, including equities, have traded higher, reducing demand for safe-haven currencies like the US dollar and Japanese yen.
– Australian dollar often serves as a barometer for global risk appetite in foreign exchange markets, benefitting when sentiment improves.
– **US Dollar Weakness**
– Recent comments from Federal Reserve officials and softer US inflation data have weighed on the greenback.
– Traders continue to speculate on the timing and scale of US rate reductions, with consensus swinging toward the possibility of two rate cuts before year
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