AUD/USD extends its upside below 0.6850 amid thin holiday trading
- AUD/USD gains momentum around 0.6845 amid the quiet session on Thursday.
- US Richmond Fed Manufacturing Index came in weaker than expected, dropping to -11 in December vs. -5 prior.
- The hawkish remarks from the Reserve Bank of Australia (RBA) boost the Aussie.
- US weekly Jobless Claims, Trade Balance, and the November Pending Home Sales are due on Thursday.
The AUD/USD pair extends its upside and faces a resistance level near 0.6850 during the early Asian session on Thursday. The uptick of the pair is bolstered by the softer US Dollar (USD) to its lowest level since July. The market is likely to trade in a quiet session in the last week of 2023. AUD/USD currently trades near 0.6845, up 0.02% on the day.
On Wednesday, the US Richmond Fed Manufacturing Index dropped to -11 in December from -5 in November, below the market consensus of -7. The Greenback continues its downward momentum as investors anticipate that the Federal Reserve (Fed) is done with the hiking cycle and will cut the interest rate next year. The Fed policymakers penciled in 75 basis points (bps) of easing in their December rate projections, but the market has priced in 150 bps in cuts next year. This, in turn, exerts some selling pressure on the USD and acts as a tailwind for the AUD/USD pair.
On the Aussie front, the hawkish stance from the Reserve Bank of Australia (RBA) lifts the Australian Dollar (AUD) against the USD. The RBA Minutes from the latest meeting showed that the board was comfortable pausing rates to assess the impact of past hikes amid encouraging signs of progress.
Later on Thursday, the US weekly Jobless Claims report is due. Also, the Trade Balance and the November Pending Home Sales report. On Friday, the Chicago Purchasing Managers' Index for December will be released.